Taiwan’s Export Orders Decline by Least in a Year
Taiwan’s export orders fell at the slowest pace in a year in September, adding to signs the island’s economy is recovering from its first recession since 2001.
Orders, an indication of shipments in the next one to three months, dropped 3 percent from a year earlier, after an 11.96 percent decrease in August, the Ministry of Economic Affairs said in Taipei today. The median estimate of nine economists surveyed by Bloomberg was for a 6.3 percent decline.
Demand from the U.S., Taiwan’s second-largest export market, remains weak as the economy recovers from the deepest recession since the 1930s. Federal Reserve Chairman Ben Bernanke on Oct. 1 said U.S. economic growth next year probably won’t be strong enough to “substantially” bring down the jobless rate, which may remain above 9 percent at the end of 2010.
“The September export orders are supported mainly by rising demand from China and Hong Kong combined, as the U.S. and European economies are stabilizing and demand hasn’t picked up yet,” said Tony Phoo, an economist at Standard Chartered Bank in Taipei. “Overall orders are likely to start showing positive growth in October and November, especially for technology and communications products.”
Electronic Products
Taiwan is dependent on a rebound in exports to sustain its recovery from a yearlong recession. Overseas shipments account for more than two-thirds of the island’s economy. Improving demand for electronics products prompted companies including Nanya Technology Corp. and Compal Electronics Inc. to forecast better sales this quarter.
Asian countries such as China and Japan have reported slower declines in exports as the slump in global demand eased. China’s economy expanded at the fastest pace in a year last quarter, spurring sales for Taiwan electronic goods makers including HTC Corp., the world’s largest producer of handsets using Microsoft Corp’s Windows operating system.
China, Taiwan’s biggest export market, expanded 8.9 percent in the third quarter from a year earlier, and Japan’s exports fell at the slowest pace in 10 months in September.
“We are expecting a single-digit decline in export orders in October and orders may turn positive in November as demand for electronics is strong on the launch of products such as Microsoft’s Windows 7,” said Cheng Cheng-mount, an economist at Citibank Taiwan Ltd. “Export orders growth was still driven mainly by demand from China in September as the economic recovery in the U.S. remains weak.”
Notebook Computers
Compal Electronics, the world’s largest contract manufacturer of laptops by shipments, will sell more notebook computers than it forecast, Chief Financial Officer Gary Lu said in an interview on Oct. 19. The company, which supplies to clients including Acer Inc. and Hewlett-Packard Co., expects further growth this quarter after Microsoft Corp. released its Windows 7 operating system on Oct. 22.
Taiwan’s central bank Governor Perng Fai-nan said on Sept. 24 he plans to maintain low borrowing costs because of the slow pace of the economic recovery. The central bank left the benchmark rate unchanged last month after seven cuts since September 2008 that reduced it to a record-low 1.25 percent.
Asia’s developing economies will expand 7.3 percent in 2010 after growing 6.2 percent this year, the International Monetary Fund said on Oct. 1. Advanced economies including the U.S., Germany and Japan will shrink 3.4 percent in 2009, it forecast.
Stocks, Currency
Today’s figures were released after the close of trading on the stock exchange. The Taiex index rose 0.5 percent to close at 7,649.28. It has gained 67 percent this year. The Taiwan dollar was little changed.
Taiwan’s industrial production grew 1.01 percent in September from a year earlier, after dropping a revised 9.47 percent in August, the government said today.
The value of export orders rose to $30.84 billion last month, compared with $28.29 billion in August, today’s report showed.
Export orders to China and Hong Kong combined rose 9.44 percent last month, compared with a gain of 7.27 percent in August. Orders from the U.S. fell 10.6 percent from a year earlier, compared with a 19.27 percent decline in August.
Orders for electronics fell 0.25 percent last month, compared with a drop of 12.2 percent in August, today’s report showed. Demand for information technology and communications products rose 2.41 percent in September, after declining 9.07 percent the previous month.
Filed under: money by Fred