| Actual | Previous | |
|---|---|---|
| Balance of Trade | US$7.89B | US$2.49B |
| Imports - Y/Y | -17.8% | 19.0% |
| Exports - Y/Y | 1.3% | 18.1% |
Highlights
Taiwan's trade surplus widened from $2.49 billion in January to $7.89 in February. Exports rose 1.3 percent after increasing 18.1 percent previously, while imports fell sharply, down 17.8 percent after a previous increase of 19.0 percent.
Weaker year-over-year growth in exports and imports largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of trade flows - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and trade volumes were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024. This, in turn, means that year-over-year growth in trade volumes was somewhat stronger than it would otherwise be in January 2024 and somewhat weaker in February 2024.
Because of this factor, it is more meaningful to examine January and February data combined to assess the strength of trade flows at the start of the year. The trade surplus for the two months combined is $10.382 billion, an average of $5.191 billion per month, which is down from the $11.1 billion surplus recorded in December. Exports and imports rose 9.7 percent and 0.7 percent respectively on the year for January and February combined, compared with an increase of 11.8 percent and a decline of 6.5 percent respectively in December. The combined data therefore show that growth in exports has slowed at the start of the year, while there has been a modest rebound in imports.
Weaker year-over-year growth in exports and imports largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of trade flows - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and trade volumes were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024. This, in turn, means that year-over-year growth in trade volumes was somewhat stronger than it would otherwise be in January 2024 and somewhat weaker in February 2024.
Because of this factor, it is more meaningful to examine January and February data combined to assess the strength of trade flows at the start of the year. The trade surplus for the two months combined is $10.382 billion, an average of $5.191 billion per month, which is down from the $11.1 billion surplus recorded in December. Exports and imports rose 9.7 percent and 0.7 percent respectively on the year for January and February combined, compared with an increase of 11.8 percent and a decline of 6.5 percent respectively in December. The combined data therefore show that growth in exports has slowed at the start of the year, while there has been a modest rebound in imports.
Definition
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.
Description
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.
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.
