March 7, 2018 / 9:09 AM / 7 months ago

UPDATE 2-Global tech demand to buoy Taiwan exports despite surprise Feb drop

* Feb exports -1.2 pct y/y vs Reuters poll f’cast +6.35 pct

* Exports to U.S. +12.6 pct y/y, to China -10.8 pct

* Q1 export to rise up to 8 pct y/y - ministry

* January-February exports reach record high in value terms (Adds official, analyst comments, detail)

TAIPEI, March 7 (Reuters) - Taiwan’s exports snapped 16 straight months of growth to log a fall in February due to the Lunar New Year, although robust global tech demand will continue to power the island’s manufacturing activity and buoy first quarter shipments.

February exports fell 1.2 percent from a year earlier, government data showed on Wednesday, worse than a Reuters poll of analysts that had forecast growth of 6.35 percent. Exports rose 15.3 percent in January.

Annual export growth in February was the weakest since September 2016, partly due to fewer working days compared with the previous year, as the Lunar New Year holidays fell in February this year but occurred in late January last year.

The finance ministry’s statistics department, however, expects exports to grow up to 8 percent in the first quarter.

Trade-reliant Taiwan last month raised its 2018 economic growth forecast to 2.42 percent from 2.29 percent thanks to strong demand around the world for new smartphones and other gadgets.

Taiwan’s factories are an integral part of the global supply-chain for technology giants such as Apple Inc.

January-February exports, typically assessed together as they even out the distortions from the Lunar New Year, rose 7.3 percent from a year earlier to a record high of $49.75 billion.

“The outlook of the global economy remains positive and annual growth could be slightly better than last year,” the statistics department said in a statement.

Shipments to China in February dropped 10.8 percent from a year earlier, and those to the United States increased 12.6 percent. Exports to Europe and Japan were up 19.1 percent and 9.8 percent, respectively.

Taiwan’s annual imports in February gained 0.9 percent versus a median analyst forecast of 8.39 percent.

Imports of electronic components rose 13.1 percent, crude oil increased 33.6 percent and chemicals gained 0.3 percent.

TRADE WAR RISK

Beatrice Tsai, an official with the ministry, told reporters U.S. President Donald Trump’s plan to slap tariffs on imports of steel and aluminum had stoked fears of a global trade war, which presents a “major risk” for Taiwan’s export.

While analysts expect continuing strength for Asian exporters helped by robust tech demand, they say export momentum is set to cool in the coming months as the first quarter is Taiwan’s weakest after the year-end holiday season.

The island’s exports rebounded in 2017 to 13.2 percent after two years of contraction, but momentum may be affected by trade protectionism and also a strong Taiwan dollar.

But the surge in Taiwan’s January’s export orders, a leading indictor of actual shipments two to three months ahead, jumped 19.7 percent, pointing to still-strong momentum.

“First-half export growth remains relatively firm thanks to positive economic momentum in Europe and the United States,” said analyst Achilles Chan at Cathay Financial Holdings.

A manufacturing survey also signals solid growth for Taiwan’s factories, with headline PMI at 56.0 in February, slightly lower than 56.9 in January. (Reporting by Yimou Lee, Liang-sa Loh and Roger Tung; Editing by Jacqueline Wong)

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