| Actual | Previous | |
| Balance of Trade | US$12.77B | US$18.89B |
| Imports - Y/Y | 6.8% | 63.6% |
| Exports - Y/Y | 20.6% | 69.9% |
Highlights
Taiwan's trade surplus narrowed from $18.89 billion in January to $12.77 billion in February. Exports rose 20.6 percent on the year after increasing 69.9 percent previously, while imports increased 6.8 percent after a previous increase of 63.6 percent. The volatility in trade flows between January and February partly reflect the timing of lunar new year holidays but export growth remains supported by very strong demand for high-tech Taiwanese products.
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.