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Economy

Taiwan's May exports surge on tech demand as COVID clouds outlook

Island sees risks ahead from domestic infections and slow vaccine deliveries

Companies such as Taiwan Semiconductor Manufacturing Co. enjoyed strong demand for tech products to support remote working and the "no touch" economy during the pandemic.   © Reuters

TAIPEI (Reuters) -- Taiwan's exports rose for an 11th straight month in May, and far exceeded expectations, boosted by global demand for microchips and hi-tech gadgets in the work-from-home pandemic boom, but the island's own COVID-19 spike could cloud the outlook.

Exports rose 38.6% from a year earlier to $37.41 billion last month, the Ministry of Finance said on Tuesday, setting a new historical high in value terms for a single month.

Analysts in a Reuters poll had forecast a rise of 26% for May, compared with a 38.7% increase in April.

The ministry attributed the growth to continued strong demand for tech products to support remote working and the "no touch" economy during the pandemic.

Firms such as Taiwan Semiconductor Manufacturing Co. are major suppliers to Apple and other global tech giants, as well as providers of key chips for auto companies and lower-end consumer electronics.

The ministry said it saw risks ahead from a rise in domestic COVID-19 infections in Taiwan as well as progress on vaccine deliveries, which have been a problem for the island as it gets caught in global supply shortages.

However, it said global economic fundamentals continue to improve, and that Taiwan's semiconductor industry stands to gain from demand for 5G and other high-tech products.

The ministry added that assuming coronavirus cases do not start affecting production domestically, which has not happened in a significant way so far, exports in the second quarter could exceed $100 billion.

May exports to China, Taiwan's largest trading partner, jumped an annual 29.5% to $15.69 billion, while exports to the United States grew 27.3% on year.

Imports leapt 40.9%, against economists' expectations for a 25.7% rise and an increase of 26.4% in April.

Taiwan could see June exports increase in the range of 27% to 31% from a year earlier, the ministry added.

The government has remained bullish about Taiwan's prospects even with the pandemic at home.

Taiwan's economy will grow at its fastest pace in more than a decade in 2021, the statistics office predicted last week.

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