September 9, 2019 / 9:42 AM / 14 days ago

UPDATE 1-Taiwan August exports rise unexpectedly on strong smartphone demand

* August exports +2.6% y/y vs Reuters poll f’cast -0.2%

* Exports to U.S. +22.8% y/y, to China +1.1%

* Ministry says smartphone demand boosts growth

* Sept exports to be in range of -1% to -2.5% y/y - ministry

By Yimou Lee

TAIPEI, Sept 9 (Reuters) - Taiwan’s exports surprisingly expanded in August, confounding expectations for a fall, as strong demand for smartphones countered the effects of the prolonged U.S.-China trade war.

Taiwan’s exports rose 2.6% from a year earlier to $29 billion in August, a record for the month by volume, data from the finance ministry showed on Monday.

The unexpected rebound in overall exports comes ahead of the year-end peak season when smartphone vendors launch new models including Apple, whose next line of iPhones will be unveiled on Tuesday.

A Reuters poll had forecast a 0.2% fall. In July, the economy’s exports contracted 0.5% from a year earlier after surprise growth in June .

“It’s better than the previous forecast despite the continuous impact from the China-U.S. trade frictions,” Finance Ministry official Beatrice Tsai told reporters in Taipei.

She said the growth was boosted by demand for high-end smartphones, including those from both “Apple and non-Apple suppliers.”

The ministry said the island’s exports could “gradually stabilise” in the coming months helped by the peak year-end season for gadgets and returning production from Taiwan manufacturers who moved parts of their supply chain back home amid the trade war.

KGI Securities’ economist Carl Liu said growth in August was helped by orders shifting to Taiwan from China as manufacturers tried to get around trade tariffs.

“Orders shifted to Taiwan not only offset the negative impact from the U.S.-China trade war, it also helped with a mild economic growth for Taiwan.”

Taiwan’s factories are a key part of the global supply chain for tech giants such as Apple and Huawei and its exports have suffered from both trade war disruptions and sluggish global demand for hi-tech gadgets such as smartphones.

Shipments to the United States grew 22.8% to a record high, boosted by strong demand for telecommunications and electronic products, and exports to China expanded 1.1%, its first growth since October last year.

Exports to Japan rose 7% to a record for August, while those to Europe declined 2.2%.

The finance ministry said it expected September exports to contract in a range between minus 1% and 2.5%.

Taiwan’s government in August raised its 2019 economic growth forecast to 2.46% as more factories move production back to the island from China as the Sino-U.S. trade war escalates. (Reporting by Yimou Lee, Liang-sa Loh and Emily Chan; Editing by Jacqueline Wong)

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