September 8, 2017 / 10:18 AM / a year ago

UPDATE 1-Global recovery, smartphones keep Taiwan's exports in the fast lane

* Aug exports +12.7 pct y/y, 11th consecutive month of growth

* Exports to China +14.5 pct y/y; U.S. +7.1 pct

* Taiwan’s Q3 exports expected to surpass 10 pct on year - govt (Adds comments, details)

By Jess Macy Yu and Liang-Sa Loh

TAIPEI, Sept 8 (Reuters) - Taiwan’s exports grew faster than expected in August, buoyed by strong global tech demand, a boon for its manufacturers who are pinning their hopes on new gadgets to drive sales.

The upbeat performance will shore up confidence Taiwan can meet upwardly revised economic growth targets as the government struggles to revitalise its export-reliant economy at a time when public support for President Tsai Ing-wen is on the wane.

A new cabinet took over on Friday, giving the government a fresh chance to get key legislation passed and implemented.

Exports in August rose 12.7 percent from a year earlier, expanding for the 11th consecutive month, the finance ministry said on Friday. That beat the 11.5 percent forecast in a Reuters poll and 12.5 percent growth in July.

Imports rose 6.9 percent compared with July’s 6.5 percent pace, resulting in a trade surplus of $5.71 billion.

Overall, exports benefitted from the global economic recovery and smartphone shipments, finance ministry official Beatrice Tsai told a news conference.

“For third quarter, the exports growth rate year-on-year can be expected to surpass 10 percent, this is the first instance of a grand situation since 2015,” Tsai said.

“For electronic components exports, the main reason (for growth) is from Apple’s iPhone 8 exports.”

The island’s manufacturers have reaped from strong global tech demand. Shares of camera lens maker Largan Precision Co Ltd hit a record high in August, and Genius Electronic Optical Co Ltd also climbed to a new peak.

Apple Inc, a big customer of Taiwan’s contract manufacturers, also delivered surprisingly strong fiscal third-quarter earnings and signalled that its upcoming 10th anniversary phone lineup was on schedule, boosting expectations of increasing shipments from its supppliers. Its iPhone 8 launch is expected in mid-September.

Taiwan is one of Asia’s major exporters, especially of technology goods, and its export trend is an important gauge of global demand for technology gadgets worldwide.

Leading indicators signal continuing momentum. Taiwan’s factory purchasing managers’ index rose to a four-month high in August, with the data showing stronger increases in output, new orders and employment.

Annual exports in August to China and the United States, Taiwan’s two biggest markets, jumped 14.5 percent and 7.1 percent, respectively. That compared with 11.7 percent and 18.7 percent in July.

The finance ministry said in a statement that electronic component shipments “entered a high season” in August, growing 14.4 pct on year.

Analysts said continuing strong export momentum this year will keep the central bank from raising rates.

“Along with the excellent performance of July and August exports, I’m optimistic about the export outlook for the second half of the year,” said KGI Investment Advisory analyst Carl Liu.

“Additionally, because current inflation is mild, it’s expected that the central bank won’t raise interest rates this year. The likelihood of raising rates in the first half of next year is also not high,” Liu added.

A new cabinet took over in Taiwan on Friday, after the former premier resigned earlier in the week. (Additional reporting by Emily Chan; Editing by Jacqueline Wong)

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