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Exports up 18.5% from January

The nation's exports last month continued to see robust demand from China and other Asian countries, compensating for sluggish demand from the US as a result of its subprime mortgage crisis, a Ministry of Finance official said yesterday.

"The nation's exports are expected to continue growing at a moderate pace, despite a global economic slowdown triggered by the US subprime crisis," Hsu Ray-lin (許瑞琳), deputy statistician at the ministry, told a press briefing.

Exports last month grew 18.5 percent year-on-year to US$17.66 billion, while imports rose 25.9 percent to US$15.95 billion, resulting in a trade surplus of US$1.71 billion for last month, the ministry's statistics showed. Taiwan has had a trade surplus for 24 consecutive months.

Exports to Hong Kong, China, six ASEAN member countries and South Korea all saw growth of more than 31 percent from a year earlier, while exports to Europe rose 11.8 percent year-on-year, the statistics showed.

Exports to China and Hong Kong combined rose 31.5 percent last month, the biggest gain since February 2006. Exports to the US, however, declined by 8.5 percent from a year earlier to US$2.04 billion last month.

Alan Tseng (曾炎裕), vice president at Capital Securities Corp (群益證券), said the decline was a result of seasonal factors.

"February has always been a slow month for the nation's electronics exporters," he said.

After years of robust growth, it makes sense that exports would begin to see moderation, he said, adding that the nation's exports would not be hit hard by the decline in US consumption.

Tseng was also optimistic about the resilience of the nation's exporters, which he said would weather the US crisis.

He said the US' impact on the nation's exporters was not yet clear, as orders had not been cut substantially and an expected price cut late this month or next month to clear US inventories may not affect new orders.

Other economists, however, are less optimistic, saying that a sluggish US economy will eventually hurt Taiwan since exports to China are mostly components to be reprocessed and sold in the US and Europe.

Exports in the first two months of the year showed a combined expansion of 4.3 percent over the average monthly level in the fourth-quarter last year.

But "as global industrial activity is expected to stagnate during the first half of the year -- as the US economy remains weak and demand from other developed markets slows -- Taiwan's export sector will still have to struggle against global headwinds in the coming months," Grace Ng (吳向紅), an economist at JPMorgan Chase & Co in Hong Kong, said in an e-mail yesterday.

Deutsche Bank economist Juliana Lee in Hong Kong also said the bank saw a continued risk to Taiwan's export sector, given the uncertain global financial market and slower growth in the US and Europe.

"Going forward, we think the export sector, which accounts for 50 percent of the GDP, is likely to remain below the trend," Lee wrote in an e-mail yesterday.

Meanwhile, the ministry's statistics showed that imports of industrial equipment such as machines and precision instruments rose 19.5 percent in the first two months from a year earlier, following a small decline of 0.8 percent year-on-year in the fourth quarter.

That suggests a recovery in domestic private investment early this year, Cheng Cheng-mount (鄭貞茂) and Renee Chen (陳瑩若), economists at Citi Investment Research in Taipei, said in a client note yesterday.

However, surging consumer prices and a weakening global economic outlook could see households scale back, resulting in a drop in imports in the coming months, said Sumei Tang, a Sydney-based economist at Moody's Economy.com.
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