Taiwan’s exports are expected to slow to a crawl through the end of the year, according to Finance Minister Su Jain-rong, as waning global demand piles pressure on the trade-dependent economy. 

Growth in overseas shipments might slump to single digits in the fourth quarter of 2022, Su said in an interview in Manila on Friday. He cited global headwinds including the US Federal Reserve’s rate hikes and slowdowns in the US and Europe, which are major trading partners for Taiwan.

Taiwan had been enjoying nearly a year and a half of double-digit export growth during the pandemic, with a global computer chip shortage fueling demand for its electronics and semiconductors. Last year the economy grew at the fastest pace since rebounding in 2010 from the global financial crisis.

This year, though, Taiwan has faced several challenges. Global demand for many products has waned as inflation elsewhere skyrockets and several major economies face the prospect of a slowdown or recession. China, another important trading partner, has struggled with ongoing Covid outbreaks and lockdowns, along with a property crisis. 

August export growth slowed to just 2%, the slowest pace in more than two years, prompting Ministry of Finance chief statistician Beatrice Tsai to warn at the time that “winter is coming” earlier than expected. She also cautioned that September exports could even shrink by as much as 3% from a year earlier.

Export orders have also slowed. While orders gained 2% in August, reversing a decline in July, purchases from China and Hong Kong fell more than 25% last month. Almost 40% of Taiwan’s exports went to Hong Kong and China for the first eight months of the year, data from the finance ministry showed.

Su said Taiwan is watching China’s economic progress carefully. Sporadic lockdowns there have dented demand and confidence, becoming a major drag on growth in the world’s second-largest economy.

“We should be careful” if something happens to China’s economy, Su said, adding that Taiwan is trying to mitigate risks stemming from China by diversifying.

Taiwan has been looking to diminish its dependence on China in recent years. Taipei last year asked to join Asia-Pacific’s biggest working trade deal, though its application is still pending.