Fri, Jun 29, 2012 - Page 13 News List

Manufacturing sentiment down as exports slump

By Lisa Wang  /  Staff reporter

The business gauge for the local manufacturing sector plummeted at the fastest monthly pace in three-and-a-half years last month, pressured by the lingering eurozone debt crisis and weaker economic growth in China and other emerging markets, a private think tank said in a survey yesterday.

The outlook for the next six months also dimmed as 35.1 percent of respondents in a separate survey turned bearish about their businesses, a spike from 20.9 percent in a similar survey in April.

About 20 percent of locally made products are exported to Europe directly from Taiwan, or re-exported from China, highlighting the significant impact from weakness in eurozone economies, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said.

The latest surveys indicate that “the worst is not over yet,” Gordon Sun (孫明德), director of TIER’s economic forecasting center, told a media briefing.

“It is not like the V-shaped recovery Taiwan experienced in 2009 ... It feels like walking in a long tunnel without knowing where the end is,” Sun said.

THIRD MONTH IN A ROW

The survey for the manufacturing sector plunged 5.64 points to 90.81 from 96.45 points in April, marking the third consecutive monthly decline, TIER said.

However, it was not sufficient for the institution to cut its Taiwan GDP growth forecast to less than 3 percent for this year, TIER said.

In April, the institution projected an annual GDP increase of 3.48 percent for Taiwan this year, compared with the government’s 3.03 percent growth forecast.

TIER said the electronics and component segments, which account for one-third of the nation’s manufacturing sector in terms of shipments, were the bright spots in the latest survey, as only electronics manufacturers were upbeat about the next six months.

“The electronics and component segments are expected to bounce back in the second half of this year as sales of new products like the new iPhone and Ultrabooks ... will boost demand for locally made products,” Sun said. “The rebound will underpin Taiwan’s economy.”

However, the service sector remained steady with the survey showinbg a slight increase of 0.06 points to 93.43 last month from April’s 93.37.

INTERNAL PROBLEMS

In addition to the impact from unfavorable macroeconomic developments, Taiwan also faces fundamental problems, including the urgent need to upgrade industries and achieve free-trade agreements (FTA), leading to the vulnerability of its exports, TIER said.

The nation’s exports shrank 4 percent year-on-year in the January to March quarter, the first decline since the fourth quarter of 2009, while South Korea posted a 3 percent gain in exports during the same period.

Darson Chiu (邱達生), an associate research fellow at TIER, attributed the fall in exports to China’s lower imports of Taiwan’s electronic products as Beijing focuses on economic transformation, while less than 5 percent of Taiwan’s exports are protected by FTAs. South Korea has 35.3 percent of its export items protected by FTAs, Chiu said on the sidelines of the briefing.

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