Is Taiwan tumbling to a technical recession?

Exports increased by 1.3% yoy in November, much lower than the 8.6% expected. They contracted 3% mom, sa. Imports contracted by 10.4% yoy, resulting in a bumper trade surplus of USD 3.2 billion.

In terms of export destinations, the weakness was observable across the board, but two regions stand out. Exports to Europe (which account for about 10% of the total) contracted by a whopping 22% yoy. Exports to Asia ex China and Hong Kong (which account for about 20% of total) were the only ones that expanded yoy—and by a healthy rate of 20%.

The weakness in imports is mainly due to capital goods and, hence, closely linked to the export weakness and gloomy growth prospects.

The trade numbers extend the pattern observed over past quarters, namely of weak export hitting investment and domestic demand. Average exports in October and November are now 2.7% below the average exports in Q3, compared to a contraction of 2.3% in Q3. Hence, there is an increased chance that we will see a second quarter of negative growth in Q4, marking a technical recession.