Taiwan Export still sluggish...

* According to numbers released by the Directorate General of Budget, Accounting and Statistics (DGBAS) on May 22, Taiwan's economy suffered another blow as the island's exports dropped another 18.1% y-on-y. It marked the eighth consecutive month of decline. Worse yet, responsible officials believed exports have not bottomed out, with most anticipate another 20%-plus drop in May.

* Out of the four major export destinations, only the ASEAN countries have registered a slim growth of 0.1%. Markets in the US, China/Hong Kong, and the EU all declined 15.2%, 24.2%, and 26.6% respectively. With overstocked inventory following the pandemic, the outlook isn't particularly promising. The spillover may inch into Q3 and handicap the overall economic performance this year.

* Following the release of these disappointing export numbers, economy will likely become one of the central issues in the upcoming 2024 presidential and legislative elections. Though this is not an ideal situation for the ruling party, playing "anti-China" card, and escalating ideological conflicts both in and out of Taiwan, may have carry the same weight with the island's electorate as in the 2020 contest.

* On the other hand, China is expected to put additional economic pressure in the coming months. Including the recent relaxation on tourist groups from Taiwan, the measures that Beijing will likely pursue will be uni-direction, unilateral, and uni-personal in general. These measures require no prior consultation with Taiwan, and they are aimed to appeal to the grassroots. Decisions will be made primarily by individuals, not families or companies. It's a risky move, as Beijing's past goodwill overtures did not translate to heightened identification toward China. The vote on January 13, 2024, will be the first litmus test.