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Taiwan October exports contract 1.9%
November 09, 2012
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TAIPEI: Taiwan’s exports slipped in October, against a median forecast for a rise and dragged down by a fall in the value of IT and communications product shipments, raising questions over recent signs of a recovery for Asia’s exporters.

Exports fell 1.9 per cent from a year earlier, against a median forecast for growth of 1.78 per cent in a Reuters poll of 10 economists. The island’s finance minister had told parliament earlier in the week that exports in October would contract, though he did not give specific reasons.

The fall serves as a reminder that despite recent signs of a recovery for the region’s exporters, they remain vulnerable as demand in their main markets has yet to show sustained strength.

“Looking into next year, exports will still be weak, as there are many downside risks in the international environment,” said Anita Hsu, economist at Masterlink Securities in Taipei.

“We expect full-year exports will grow at a 0-5 per cent rate next year.”

Exports in October to China, Taiwan’s largest trading partner, edged up 0.3 per cent, but those to the US contracted 9.5 per cent after rising in the previous month and those to Europe fell 11 per cent.

Exports had risen 10.4 per cent on year in September, the first rise after six straight months of contraction and well above forecasts, raising hopes the economy had bottomed out, though the figure was coloured by a one-off surge in refined oil products.

Taiwan is one of Asia’s most export-dependent economies and is highly leveraged to the cycle of demand for technology products due to its leading position in the component supply and contract manufacturing chain.

It traditionally benefits from the year-end shopping season as new gadgets go on sale, but faces leaner times after that until the next new product cycle begins. A number of new gadgets, such as Apple Inc’s iPhone 5, have recently gone to market.


Official data last month showed that orders for its exports, a leading indicator of demand for Asia’s exports which typically leads actual exports by two to three months, picked up in September, while a private PMI survey noted a slowdown in export orders in October had moderated.

Shipments from fellow technology exporter South Korea saw their first annual gain in four months in October, raising hopes that global demand may be recovering, albeit slowly.

 Recent figures from some of Taiwan’s exporters, however, give a mixed picture, underscoring the uncertainty over the outlook.

 Contract chip maker Taiwan Semiconductor Manufacturing Co (TSMC) recently predicted a slowdown in sales in the six months to next March as its customers adjust inventories, followed by a rebound in sales in the second quarter of 2013 thanks to strong demand for mobile devices.

Its rival, UMC, said on Thursday its October sales rose 12.4 per cent from a year earlier [ID:nT8E8L801C], though Quanta Computer Inc, the world’s top contract laptop PC maker, said its October sales fell 7.46 per cent.Neither gave reasons.

In addition, Taiwan’s imports fell 1.8 per cent in October, reflecting lower prices for some raw materials but also manufacturers’ unwillingness to make fresh investments until the murky external outlook clears.

Taiwan recently cut its 2012 economic growth forecast for a ninth time in just over a year as Europe’s ongoing woes, concerns over the US economy and China’s slowdown kept the island’s third-quarter growth below forecasts.

The finance ministry said it still saw the possibility that fourth-quarter exports would see a slight growth from a year earlier, due to a low base effect.

But economists note that a recovery may take a while.

“Exports in November-December may see a growth on low base,” said Andrew Tsai, economist at KGI Securities in Taipei.

 “Since Q4 is still at a stage of inventory correction for the electronics sectors, Taiwan’s exports may need to wait till Q1 to improve on inventory restocking.”


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