Taiwan's Trade Boom Prompts Another Growth Upgrade

(MENAFN- ING) Taiwan's outlandish trade growth numbers continue to beat forecasts

Taiwan's exports surged to 51.7% year-on-year in May, up from 39.0% YoY in April, coming in much stronger than both our expectations and those of the market. Year-to-date, exports are now up 48.7% YoY. Impressively, all of this export growth is coming after what was already a record year for trade in 2025.

Unsurprisingly, Taiwan's exports continue to be led by its major tech exports. The broader Machinery and Electrical Equipment category, which represents 84.5% of Taiwan's total exports, grew 62.7% YoY in May. Taiwan's semiconductor exports hit a four-month high of 58.3% YoY while computer and accessory exports saw 97.8% YoY growth in May.

By export destination, Taiwan's exports saw a huge surge to Singapore, up 247.5% YoY in May. Singapore's proportion of Taiwan's total exports has risen from 6.7% in 2025 to 9.7% in 2026. This is likely focused in AI-driven semiconductor demand, where Singapore might act as a hub for re-exports across ASEAN, and perhaps to China as well. We did see in China's import data out earlier today that its imports from Singapore have also been unusually strong at 54.7% YoY on a year-to-date basis through the first five months of the year.

While not matching the torrid growth of exports to Singapore, Taiwan's exports to Mainland China and Hong Kong (35.4%), the US (47.9%), and the EU (42.2%) all continued to see rapid (albeit below headline) growth in May.

Strong trade growth numbers continue to be supported by rising tech prices. Taiwan's export price index rose 18.1% YoY, while the import price index rose by 17.2% YoY in May.

On the import side, Taiwan's imports rose 54.9% YoY in May, also beating forecasts and hitting a four-month high. This brought year-to-date import growth to 37.8% YoY.

A big part of the import story remains on the tech side; we saw strong semiconductor imports of 70.1% YoY in May, while semiconductor equipment imports also rose 22.4% YoY.

We're also starting to clearly see the impact of higher energy prices beginning to feed through into the trade data. Taiwan's petroleum imports rose 76.4% YoY in May, bringing year-to-date import growth to 4.4% YoY. At these higher prices, petroleum imports represented 5.8% of Taiwan's total imports, a sharp uptick compared to the 3.9% year-to-date level. Given Taiwan's high energy import dependence, it will likely have to foot the bill regardless of the price, and further spikes in oil prices will risk imports continuing to overshoot.

In net, above-forecast exports and imports have, to some extent, balanced each other out, leading to a trade surplus of USD17.91bn in May, which was a little stronger than expectations.

Exports, imports, and trade balance all beat market forecasts in May Taiwan's continued export boom merits another slight tweak to the GDP forecast

Prior to today's data, we were already holding the most aggressive GDP growth forecast on the market at 10.3% YoY this year.

After an upward revision to 1Q26 GDP data, and the continued upside surprises in both export and export orders data, we are revising our forecast a little higher to 10.5% YoY.

With growth consistently beating forecasts and inflation starting to overshoot the target, we also believe there could be a chance that we see earlier-than-expected policy tightening from the CBC, even if the rest of the economy looks relatively lacklustre in comparison to the sectors benefiting from the tech boom. We expect the CBC to stand pat at next week's meeting, but potentially turn more hawkish in its communications; we are looking for inflation to continue to move higher in the coming months, and have a rate hike pencilled in for 3Q26.

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