The production value of the machinery sector is expected to fall 4.18 percent this year from a year earlier, partly because of slowing demand from China because of tightening fiscal expenses, according to a report released by a government-funded research institute on Tuesday.
The Industry and Technology Intelligence Service said a free-trade agreement signed by the US and South Korea that went into effect on Jan. 1 is expected to impact Taiwanese machinery exports to the US.
Output for the Taiwanese machinery sector is expected to drop to NT$905.8 billion (US$30.6 billion) this year, down from an estimated NT$945.3 billion last year, according to the institute’s report.
China and the US are the top two buyers of Taiwanese machinery products, with China accounting for more than 30 percent of total machinery exports and the US about 12 percent.
The institute expects the impact of falling orders from China and the US to become more visible in the first half of this year, but it said a recovery in demand during the second half from China and Southeast Asian countries, in particular Thailand, could slow the downward trend for the whole year.
The demand recovery is expected to continue into next year, when the nation’s machinery output is likely to top NT$1 trillion, it said.
The institute estimated that the nation’s machinery output reached NT$257 billion in the fourth quarter of last year, up 9.91 percent year-on-year and 6.48 percent quarter-on-quarter.
For the whole of last year, it estimated that machinery output rose 16.18 percent from 2010.