Taiwan's export growth pegged to hit 7.3%

Thanks to ballooning export orders.

According to DBS, export growth is expected to rise to 7.3% YoY, up from 4.3% on average in the preceding two months.

Here's more from DBS:

Export orders growth has accelerated to 3.2% YoY in October from 1.9% in September, indicating an improvement in the external demand outlook on a three month horizon.

Orders from China have picked up. Demand for precision instruments was particularly strong, while products including electronics, chemicals and plastics & rubbers also saw a mild rebound in overseas demand.

A moderate recovery in exports is expected to be sustained in the next 2-3 quarters, on the back of a cyclical upturn in the Chinese economy.

Meanwhile, note that the Taiwan dollar has fallen 5% against the Korean won compared to the recent peak in mid-2012, thanks to the won’s appreciation.

A weaker TWD/KRW rate should help the competitiveness of Taiwanese exporters in the high-tech industry.

On the other hand, CPI inflation is projected to ease to 2.0% YoY in November, the third consecutive month of slowdown and sharply lower than the peak level of 3.4% in August.

The downtrend in food prices remains intact for now, thanks to the recovery of agricultural supply and the normalization of weather conditions after the typhoon season.

The appreciation of the TWD against the USD and the JPY should also help to contain imported inflation. That said, core inflation would remain sticky at about 1%, reflecting the passthrough of higher energy and food prices earlier this year.

Housing rentals also went up modestly, due to the spillovers from property price increases. Overall, we expect headline inflation to slow to 1.3% in 2013 from near 2% this year, but to remain higher than the long term average of 1.0%.