Taiwan export orders contract again, outlook weak
TAIPEI, May 21 – Orders for Taiwan’s exports contracted in April for a second month, against most forecasts for a small rise, pointing to a rocky road ahead for Asia’s exporters as Europe’s woes and a slowdown in China cut demand.
Taiwan’s export orders, an indication of the strength of Asian exports and of demand for tech products globally, fell 3.85 per cent from April 2011, much worse than the median forecast of a rise of 0.85 per cent in a Reuters poll.
Orders, mostly of electronics and communications goods, also contracted 1.50 per cent from the previous month, and the government sounded a warning note about May’s figures, saying “it would not be easy for the trend to turn positive.”
“Orders from mainland China were disappointing, and echo weakening activity data there,” said Raymond Yeung, senior economist at ANZ in Hong Kong.
“For Q2, we expect headwinds from Europe will have dragged down external demand,” he said.
The figures come after two lean months for Asia’s exporters as global growth stutters amid the worsening outlook for the eurozone and a slowdown in China, while the nascent US recovery is still yet to firm up.
KOREAN EXPORTS WEAK, TOO
Taiwan’s actual exports have contracted for the past two months in succession, while exports from South Korea, like Taiwan a big tech producer, fell in the first 20 days of May.
They had also contracted in April, prompting South Korea’s government to warn of a downgrade of its target for exports.
A marked slowdown in global demand pushed Taiwan into a mild recession at the end of 2011, and though it emerged from that in the first quarter of 2012, the government cut its full-year GDP growth forecast for 2012 for a fourth time, to 3.38 per cent.
Taiwan is one of the most open of Asia’s exporters, with an exports-to-gross domestic product ratio of 74 per cent, making it extra-vulnerable to declines in external demand.
The Markit/HSBC Taiwan PMI survey at the beginning of this month showed the slowest growth rate in three months in new export orders.
Most private economists see a pickup in the economy from the second half, with full-year growth at 3.1 per cent. However, any further poor order numbers could change that assumption.
“The export order figure was really weak,” said Icy Hsu, economist at Sinopac Financial in Taipei.
“I was expecting the economy to bottom out in Q1 or Q2. Now the figure proves the bottom would be Q2 and then a slow pickup in Q3,” she added.
Orders from China in April fell by 7.8 per cent, much worse that the previous month’s 2.5 per cent shrinkage, while those from the US grew only 0.79 per cent versus March’s 6.40 rise. Orders from Europe improved a little, contracting 0.78 per cent after a 9.26 per cent shrinkage in March.
However, all is not gloom in the tech industry as demand for smartphones and tablets, particularly Apple Inc’s iPad, could provide some support for Taiwan’s exporters.
And in a further bright sign, Taiwan’s top two contract chipmakers, TSMC and UMC, have forecast strong growth from the second quarter, with TSMC raising its planned capital spending for this year to a record high.
The ministry said it saw export orders in May up from April in value terms, but noted a high base that would weigh on the year-on-year comparison. – Reuters