Taiwan's trade surplus widened from $3.43 billion in November to $4.79 billion in December. Exports fell 12.1 percent on the year after falling 13.1 percent previously, while imports fell 11.4 percent after a previous decline of 8.6 percent. PMI survey data published last week showed Taiwan's manufacturing sector contracted for the seventh consecutive month in December but at a less pronounced pace.

Exports of electronic components fell 1.3 percent on the year in December after dropping 4.9 percent in November, while exports of information, communication and audio-video products declined 10.7 percent after a fall of 5.4 percent previously. Exports to mainland China and Hong Kong were again weak, down 16.4 percent on the year after falling 20.9 percent previously, while year-over-year growth in exports to the United States dropped 2.6 percent after a previous fall of 11.3 percent. Petroleum imports rose 4.4 percent on the year, down sharply from growth of 37.6 percent previously, while imports from mainland China and Hong Kong fell 27.0 percent after a previous decline of 22.6 percent.

The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Trade balance values are calculated by deducting imports (cif) from exports (fob). The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.

Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of Taiwan’s high reliance on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.

This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.