Taiwan Feb exports fall 28.6% yr/yr
Updated: 2009-03-10 07:25
By Lillian Liu(HK Edition)
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HONG KONG: Taiwan's exports in February fell 28.6 percent from a year earlier, off January's record decline, but steep declines in the island's shipments are still pushing it deeper into a recession.
Exports, a key driver of economic growth, will likely post more declines in coming months, darkening the outlook for Asia's economies and giving central banks more reason to further cut interest rates, analysts said.
"Taiwan's exports were the earliest to start to show the negative influence of the global financial meltdown, and were the earliest to show a clear degeneration," said Cheng Cheng-mount, an economist at Citigroup. "Even though February exports were better, it's still not a clear trend. I think that other countries' exports will gradually feel the effects of the global economic slowdown."
The Chinese-New-Year effect and rush orders helped stem the export fall in February, a government official said yesterday. The lunar new year fell in January this year, whereas the week-long holiday was in February last year.
"Combined exports for January and February, which cancel out the lunar-new-year effect, declined 37.2 percent from a year earlier," the official said.
Hopes for a revival in global consumer demand have pushed shares of technology companies higher lately, but analysts believe the flurry of rush orders seen in February was temporary.
Reports this week showed US consumer confidence and sales at chain stores are continuing to decline.
Most analysts don't expect to see a rapid economic turnaround this year for Taiwan, whose exports have been hit harder than its Asian peers, such as South Korea, due to a dependency on the technology sector.
Taiwan firms make more than 80 percent of the world's laptop PCs, and the island is home to many tech companies such as TSMC and Acer Inc, whose performance is closely monitored as they provide clues on global demand for tech products.
In January, orders slumped a record 41.7 percent from a year earlier, indicating that Asia's exports will falter further.
The island's economy looks set to suffer from its longest recession ever after its gross domestic product shrank by a record 8 percent in the fourth quarter.
The government has estimated that the island's exports will fall by 20.1 percent this year, which will cause the economy to shrink by nearly 3 percent - the worst contraction since 1962, when records on the data began.
"We're anticipating these (weak export) figures to carry on until the fourth quarter of this year at least, before we see more moderation in the fall in exports," said Joseph Lau, an economist with Credit Suisse in Hong Kong. "But for figures to see any significant improvement, I think that's a story for next year."
Domestic consumption has weakened along with exports, adding to pressure on the economy and the government, which plans billions of dollars in public spending this year and has issued shopping vouchers to encourage consumers to spend more.
Reuters contributed to the story
(HK Edition 03/10/2009 page16)