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Thu, Aug 23, 2001 - Page 18 News List

Taiwan's export orders drying up

GLOOMY OUTLOOK With goods bound for foreign lands accounting for half of GDP, Taiwan's economy looks set to continue its downward slide next quarter

BLOOMBERG , TAIPEI

Taiwan's export orders dropped by more than one-sixth in July and manufacturers cut production, prompting the government to warn that the economy may be stuck in recession until next year.

Overseas orders for Taiwan-made goods fell 17 percent last month from a year earlier to US$10.8 billion after dropping 20 percent in June, the Ministry of Economic Affairs said. Factory production fell 10 percent, compared with June's 11 percent decline. Both dropped for a fifth straight month.

Taiwanese electronics makers such as United Microelectronics Corp (聯電) and Mosel Vitelic Inc (茂矽電子) are losing money and shedding workers as US orders fail to rebound. The US Federal Reserve said yesterday the world's biggest economy may continue to weaken, dashing hopes of a recovery later this year.

"Looking at exports, we'll need to wait until next year for the economy to grow if the US doesn't recover," said Chang Yaw-tzong (張耀聰), head of the economic ministry's statistics department.

Taiwan's economy shrank 2.4 percent in the second quarter from a year ago as exports of computers, mobile phones and semiconductors fell. Second-quarter growth in the US, the island's biggest market, was the slowest in more than eight years as businesses trimmed investment.

Falling orders, which point to shipments in two to three months, and a flagging US economy suggest the government may not be able to meet its 2.4 percent economic growth forecast for next quarter. Taiwan relies on exports for about half of its GDP.

Overseas shipments fell 25 percent in the first 17 days of August from a year earlier after dropping a record 28 percent last month, the Ministry of Finance said.

Orders for semiconductors, notebook computers and other electronics -- Taiwan's biggest export -- fell 36 percent from a year earlier to US$2 billion after a 34 percent drop in June. Orders for telecommunications equipment fell 14 percent to about US$2 billion, compared with a 22 percent drop a month earlier.

US customers may keep cutting orders. Dell Computer Corp, whose Taiwan suppliers include Quanta Computer Inc (廣達電腦) and Mitac International Corp (神達電腦), said sales may not revive until the second quarter of next year. The world's biggest direct seller of PCs lost US$101 million in the quarter to Aug. 3 and cut its profit forecast for the current quarter.

Orders from US customers fell 13 percent in July to about US$3.6 billion after declining 20 percent in June. Japanese orders dropped 21 percent to US$1.1 billion, and orders from Europe fell 28 percent.

Orders for plastics fell 18 percent to US$634 million, and orders for basic metals fell 8.9 percent to US$1.1 billion.

The first seven months of the year saw export orders fall 8.6 percent from a year earlier, and industrial output fell 6.9 percent.

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