Taiwan's export orders dipped 1.1% in April

But at least it's a milder decline.

According to DBS, growth momentum remains weak in 2Q. Export orders registered a mild year-on-year decline of -1.1% in April, compared to -1.7% in 1Q. 

The positive news is that the month-on-month growth in export orders rose 2.7% (sa), roughly offsetting the -2.9% drop in March.

Here's more from DBS:

The sharp pullback in overseas orders in 1Q13 (following the strong rise in 4Q12) seems to be a one-off adjustment. April’s rebound in export orders, albeit modest, supports our forecast that the quarter-on-quarter GDP growth will return to the positive territory in 2Q after the temporary contraction in 1Q.

A further deterioration in economic growth could be avoided. Still, as the 1H performance turned out to be weaker than expected, the full-year growth numbers will be negatively affected.

The government will likely revise down the 2013 growth forecast to 3.0% from 3.59% when announcing the final estimate of 1Q GDP this Friday.

The balance of payments data for 1Q have been released earlier this week. The net BOP surplus fell to USD 2.2bn in 1Q, down from USD 3.6bn in 4Q12.

This was completely due to the narrowing of current account surplus (USD 11.1bn, down from USD16.0bn), as a result of weak exports and strong rise in capital goods imports.

We expect trade balance to improve in 2Q, due to moderation in investment spending and downward correction in global commodity prices.

Already, April’s customs data showed a trade surplus of USD 2.7bn (sa), far better than the January-March average of USD 1.4bn. Foreign reserves also increased by USD 3.3bn in April, in contrast with the consecutive declines in the past two months.

If our view is correct that export recovery will gather pace in 2H, trade balance will improve further in the next six months, providing stronger fundamental support to the TWD exchange rates.