Taiwan's Machinery Export Forecast to Rise 10% YoY in 2014

According to the president of the Taiwan Association of Machinery Industry (TAMI), J.C. Wang, the island's machinery exports as whole will rise an estimated 5%-10% year on year to hit new high of US$20.5-21.5 billion or so, due mostly to recovering demand worldwide for capital equipment from aircraft, automobile, medical-equipment, semiconductor, and automation industries.

Wang points out that market fundamentals for the global machinery industry will be better in 2014 than in 2013, which saw lukewarm investments in capital equipment by various industries. In the first 11 months of 2013, Taiwan exported US$17.9 billion of machines, down 3.2% year on year. Based on the decrease, the president projects the island's machinery exports as whole will decline 2-3% year on year to around US$19.5 billion by the end of 2013.

The machine-tool sector, Wang estimates, will drop even steeper, at the rate of 16-17%, with cutting tool industry plunging at the steepest rate of 20% or so.

The recent devaluation of the New Taiwan dollar against  the U.S. dollar triggered by the U.S. government's announcement of modestly reducing quantitative easing (QE) will also give a boost to Taiwan's machinery exports. The island depends on overseas markets for sales of over 70% of the machines it builds, making it very sensitive to fluctuation of foreign exchange rates.

The NT-Dollar-to-greenback rate has recently dropped below the 30-to-1 benchmark, slightly easing the island's export pressure posed by deeply devalued competitors as the South Korean won and  Japanese yen. (KL)