Typhoon Gaemi, which made landfall on July 24, caused a two-day halt in work across Taiwan, raising concerns of potential economic losses running into hundreds of billions of dollars.
However, the latest data from the Ministry of Finance shows that Taiwan's exports in July continued to grow. It marked the ninth consecutive month of increase.
Typhoon-proofed manufacturers
The Ministry of Finance attributed the strong trade performance to the active preparation by manufacturers and the increased import of information and communication technology (ICT) products, despite the reduced number of working days and some delayed shipments due to the typhoon.
From January to July 2024, Taiwan's import and export volumes reached the second-highest levels for the same period in history, with year-on-year growth rates of 10.0% and 9.0%, respectively. As the peak export season begins in August, there is a strong possibility that the annual trade figures could reach new historical highs.
The Directorate General of Budget, Accounting, and Statistics (DGBAS) estimated Taiwan's economic growth rate for the second quarter of 2024 at 5.09%. Assuming the third and fourth quarters maintain the growth rate projected in May, and considering the first and second quarters, the annual GDP growth rate for 2024 is expected to reach 3.91%.
This reflects a quarter-on-quarter increase, with 2024 expected to outperform 2023. The improving economy has also spurred more vigorous recruitment efforts by companies.
Strong AI server demand
The shortage of AI servers has been highlighted in recent surveys. In July 2024, information and communication technology products, along with audiovisual products, topped Taiwan's export list. From January to July 2024, exports of these products surged by 93.4% year-on-year.
However, exports of electronic components, primarily semiconductor foundry products, declined by 12.0% in July due to a shift in sales from predominantly overseas markets to some domestic sales for Taiwanese downstream AI server assembly plants.
Major buyers of AI servers, such as Google, Meta, Microsoft, and Amazon, are concentrated in the United States. This resulted in a 60% year-on-year increase in Taiwan's exports to the US from January to July, raising the US share of Taiwan's total exports to 24%, the highest level in 25 years.
This shift indicates a change in Taiwan's export structure, which traditionally focused on intermediate goods, now including AI servers as a final product.
Regarding supply chain logistics and the shipping market, the Chung-Hua Institution for Economic Research noted that geopolitical tensions had previously driven international freight rates due to container shortages. However, in July, the Shanghai Containerized Freight Index (SCFI) and rates on the four major shipping routes fell, leading to a contraction in business activity and order indices for the transportation and warehousing industries.
While future expansion is anticipated, the index has dropped by 18.5% from its fastest expansion rate of 72.7% in May 2021 to 54.2%.
