Taiwan's Machinery Exports Down 11.9% YoY in June

Taiwan shipped US$1.69 billion of machinery in June, declining 11.9 percent from the same month of last year, according to the Taiwan Association of Machinery Industry (TAMI), which represents approximately 3,000 manufacturers.

President of the association, J.C. Wang, attributes the potentially serious export recession mostly to the relatively steeper depreciation of euro and Japanese yen against the greenback than that of the NT-dollar, to have made machinery from these two economies more cost-competitive than Taiwan-built machines on the international market.

Denominated in NT-dollar, the Taiwan exports were NT$51.9 billion, dropping 9.8 percent year on year.

Throughout the first half of this year, Taiwan shipped US$10.12 billion of machinery, inching down 0.4 percent from the same period of last year. Denominated in NT-dollar, the revenue was NT$316 billion, increasing 3 percent year on year.

Wang points out that both euro and yen have each devalued to their 2002 level, fueling his fear that the island's exports of machine tools will likely contract 10-15 percent year on year in 2015 if the NT-dollar-to-greenback rate fails to fall to 33-34 to 1.

He adds that such discouraging trend will persist unless orders for tailor-made machines or automation systems rise, especially when many local equipment manufacturers choose not to fill orders for off-the-shelf machines that call for steep discounts. Wang notes that the market is not growing as a whole, forcing many local manufacturers to offer discount pricing to shore up exports.

Wang says currency exchange rates are decisive on whether Taiwan's machinery production and export revenue can meet the growth targets forecast early this year.

He points out that beside the machinery industry, the island's electronics, information-communication technology, steel, and petrochemical industries also saw exports decline at double-digit rates year on year in June. The export slump in the island's electronics, petrochemical and steel industries are inevitably linked to the currently low global crude oil prices, which has impacted investment in crude oil exploration, whereas the declining export of the island's information-communication technology industry is associated with strengthening of mainland China's supply chains.