Taiwan's exports increased last month at the slowest pace in 15 months as demand from China, Japan and the US eased.
Overseas sales increased 5.6 percent from a year earlier after climbing 18.1 percent in September, the Ministry of Finance said in a statement yesterday.
Slowing exports may hurt an economy already reeling from waning consumer spending and corruption accusations against President Chen Shui-bian (陳水扁). Companies such as Compal Electronics Inc (仁寶電腦) and United Microelectronics Corp (UMC, 聯電), which rode a surge in US demand for notebook computers, music players and flat-screen televisions, are now forecasting lower sales.
"The sharp slowdown in exports is damaging and will definitely drag down economic growth," said Lucas Lee, an economist at Mega Securities Co (兆豐證券) in Taipei. "It's not easy for Taiwan to increase investment and consumption soon."
Adjusting for distortions caused by the Lunar New Year holiday, which fell in January this year and in February in last year, exports grew at the slowest pace since July last year.
Imports rose 6.1 percent last month from a year earlier, the weakest pace in six months and below the 10 percent growth expected by economists. Taiwan recorded a trade surplus of US$2.36 billion, the statement said.
The economy expanded 4.6 percent in the second quarter, the weakest growth in nine months. The government forecasts full-year expansion of 4.28 percent, a prediction that partly hinges on exports remaining buoyant.
Exports of computer chips and other electronic parts increased 10.3 percent last month from a year earlier to US$5.78 billion after climbing 26 percent in September. Exports of information technology and telecommunications products fell 12.8 percent after sliding 11 percent the previous month.
The Taipei-based Compal, the world's second-largest maker of notebook computers, on Oct. 23 cut its fourth-quarter forecast for laptop shipments to 4.6 million units from as many as 5 million.
Hsinchu-based UMC, the world's second-largest custom-chip maker, on Oct. 25 predicted shipments would fall between 2 percent and 3 percent in the fourth quarter.
Wal-Mart Stores Inc, the world's largest retailer, last Friday lowered prices on almost 100 consumer electronics items, one day after the company forecast November sales would fail to grow for the first time in a decade.
"Exports may see single-digit growth in November and December," partly because of a high comparison base a year earlier, said Lee Li-shu (
The IMF, which in September cut its 2006 economic growth estimate for Taiwan, last week chopped its forecast for US expansion next year, saying a housing slump would weaken consumer spending in the world's largest economy.
Sales to the US rose 9.1 percent to US$2.81 billion after jumping 21.5 percent in September, the report said. Exports to Hong Kong and China rose 5.5 percent to US$7.95 billion after gaining 19 percent the previous month.
China ordered lenders on Friday to set aside more money as reserves for the third time this year to curtail a credit-fueled investment boom that threatens to cause the economy to overheat.
The Chinese economy expanded 10.4 percent in the third quarter, down from a decade-high of 11.3 percent in the previous three months. The nation's M2 money supply rose in September at the slowest pace in more than a year.