Economists said Taiwan's exports growth will likely moderate this year as the US economy slows. But demand from China will likely buoy exports in January ahead of the Lunar New Year.
"The trend for technology exports in 2007 is more neutral due to the moderation in the US economy and rising competitive pressure in the region, as China gradually catches up (with Taiwan)," said Tai Hui, an economist at Standard Chartered Bank.
Taiwan's exports rose 9.1% in December from a year earlier to US$19.58 billion, on increased shipments of electronics, base metals and machinery products, the Ministry of Finance said in a statement.
That was higher than the average increase of 7.17% forecast by nine economists polled, and also faster than November's exports growth of 8.2%.
"Increased demand for machinery products and base metal products from Italy and France boosted exports to Europe in December," said Lee Li-shu, the Taiwanese ministry's top statistician.
Exports to Europe rose 22.3% to US$2.59 billion in December, while exports to South Korea totaled US$635 million, up 16.7% from the same month in 2005.
"Overall, the trade data bode well for Taiwan's economy," said Cheng Cheng-mount, economist at Citigroup Inc., pointing to a 38.5% rise in December exports of base metal products.
"The strong exports of base metal products means infrastructure-related demand remains strong in China and other emerging markets," Cheng said.
Taiwan's exports to Hong Kong and China combined totaled US$7.90 billion, and accounted for 40.3% of the island's total outbound goods in December, slightly down from 41% in November.
Exports of electronics products accounted for 28.5% of Taiwan's total exports in December. Exports of electronics grew 11.7%, the same pace as in November, to US$5.58 billion.
Economists said exports will likely accelerate in January thanks to demand from China ahead of the Chinese Lunar New Year holiday, which falls in February 2007, compared with late January in 2006.
Taiwan Securities Investment Advisory economist Forest Chen forecasts Taiwan's January exports to grow 16.1% from a year earlier.
Imports in December rose 16.40% from a year earlier to US$16.68 billion, also higher than the forecast of a 15.73% increase and November's 7.90% rise. But imports declined in value from November's US$17.12 billion.
Imports of consumer products fell 13.7% in December from a year earlier, and were 2.3% lower for the whole of 2006.
"Consumer products imports declined 2.3% in 2006 because of the tightening of domestic consumer lending," the Taiwanese ministry said in a statement.
Taiwan Securities Investment Advisory's Chen said consumer spending likely won't recover until the middle of this year, when the consumer credit scenario improves.
Economists said the island's electronics exports will likely moderate in the coming months, as companies try to cut inventory and the market enters a seasonal drop in demand.
"Steady export growth in electronic products (was) better than the market's expectation, but that won't change people's view that momentum of exports in electronics would wane in coming months due to slow seasons," said Citigroup's Cheng.
For the whole of 2006, Taiwan's exports rose 12.90% to US$224.0 billion, and imports grew 11.0% to US$202.71 billion, the ministry said.
The trade surplus in 2006 was US$21.29 billion, up 35% from US$15.82 billion in 2005, when Taiwan's exports rose 8.81% to US$198.43 billion, and imports rose 8.21% to US$182.61 billion.
Standard Chartered's Hui expects Taiwan's exports to grow between five percent and seven percent in 2007. (Dow Jones & Company, Inc.)
