Amid the global economic downturn, Taiwan’s export-dependent economy is suffering, with exports sinking a record 41.9 percent year-on-year last month while imports took a historic dive of 44.6 percent, the Ministry of Finance said yesterday.
The bleak showing prompted the central bank to cut key interest rates by 50 basis points for the sixth time in four months to help stem the decline and boost consumption.
“Outbound shipments contracted 41.9 percent, or US$9.84 billion, to US$13.64 billion in December from a year ago, while imports shrank 44.6 percent, or US$9.48 billion to US$11.78 billion,” Lin Lee-jen (林麗貞), head of the ministry’s statistics department, told a press conference yesterday afternoon.
While both declines marked the biggest in history, the nation managed to retain a trade surplus of US$1.86 billion, the ministry’s report showed.
Lin attributed the drab exports to withering world demand for Taiwanese electronic and optical products. Sales of semiconductors and electronic products dropped 43.4 percent to US$2.49 billion last month, while liquid-crystal-display panels and mineral products fell 69.2 percent and 61.6 percent, respectively, the report said.
“The ministry is shocked at the magnitude of declines,” Lin said.
Shipments to China including Hong Kong, Taiwan’s largest trade partner, plunged 54 percent, or US$5.2 billion, to US$4.42 billion, the report said. Exports to the US slumped 23.5 percent to US$2.18 billion while shipments to Europe and Japan tumbled 29.5 percent and 21.9 percent respectively, the report said.
Shipments to ASEAN countries plummeted 46 percent to US$1.94 billion, the report said. Kevin Hsiao (蕭正義), director of UBS Wealth Management Research in Taiwan, said the nation’s economy was in worse shape than expected.
“The figures about China and ASEAN countries pose particular worries as they carry increasing weight in Taiwan’s foreign trade,” Hsiao said by telephone.
He warned of tough times ahead as the first quarter is considered an off season, when exports may post bigger drops.
Altogether, exports gained 3.6 percent last year, the lowest since 2002, while imports advanced 8.2 percent, leaving a surplus of US$14.83 billion, down 45.9 percent from the previous year, the report showed.
The central bank, seeking to reverse the trend, announced another rate cut in an unscheduled news conference 30 minutes later.
Central bank Governor Perng Fai-nan (彭淮南) said the bank’s board had lowered the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral to 1.5 percent, 1.875 percent and 3.75 percent respectively, starting today.
Perng attributed the rate cut to flagging exports that contracted for four straight months with the decline increasingly widening.
“Hopefully, the rate cut will help boost exports and consumer spending,” he said.
To that end, the central bank has lowered rates by 2.125 percentage points since September. Even so, Perng said the nation would not have zero-interest rates as capital requires funds to operate.
Tony Phoo (符銘財), an economist at Standard Chartered Bank, said the central bank would continue to ease monetary policy and lower the discount rate to 1 percent in the first half of this year.
The central bank yesterday again called on lenders to ease credit for cash-strapped companies and threatened to deny disobedient banks that tighten credit of the right to purchase certificate of deposits from the central bank as a way to relieve their excess liquidity.