Sat, Nov 24, 2007 page12

• October export orders beat estimates

  ROBUST DEMAND Orders from Europe and Asia for IT, communications and consumer electronics products resulted in 18 percent growth to a record high of US$32.2 billion

  • By Kevin Chen / STAFF REPORTER
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  Export orders rose 17.99 percent year-on-year to a record US$32.2 billion last month, the Ministry of Economic Affairs reported yesterday in a statement posted on its Web site.

  The growth rate was higher than the 13.95 percent forecast by a Citigroup research team and market consensus forecast of 16 percent. It was also above the 16.1 percent increase recorded in September.

  The ministry attributed the rise mainly to strong demand, especially from Europe, for information technology and communications products, which saw an annual increase of 21.72 percent last month, the statement said.

  Orders also got a boost because of rising Asian demand for consumer electronics, which rose 19.99 percent year-on-year, and those of precision instruments, up 44.35 percent from a year earlier, the statement said.

  Meanwhile, industrial output, according to another ministry statement issued yesterday, grew 15.95 percent year-on-year last month, which was also higher than Citigroup's 7.3 percent forecast and a market consensus estimate of 9.45 percent.

  "The very strong industrial output and export orders suggest upside risks to our fourth-quarter GDP forecast of 5.02 percent year-on-year," Citigroup said in a note yesterday.

  "Booming China and European economies seemed to more than offset the weakness of the US economy," Citigroup economists Cheng Cheng-mount (鄭貞茂) and Renee Chen (陳瑩若) said.

  For the first 10 months of the year, export orders totaled US$282.9 billion, up 15.14 percent from the same period last year.

  Industrial output, meanwhile, rose 7.02 percent year-on-year, the ministry's tallies showed.

  "Those data, accompanied by strong GDP growth in the third quarter, should help a recovery in investor confidence in the financial markets," the Taipei-based Citi economists wrote.

  On Thursday, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported a better-than-expected 6.92 percent economic growth in the third quarter -- a three-year high -- on robust electronics exports and recovering consumer spending.

  Most economists had been expecting a number just above 5 percent, such as Citigroup's 5.1 percent and Lehman Brothers' 5.4 percent forecast.

  With the strong export performance, the DGBAS raised its full-year GDP growth forecast to 5.46 percent, from a forecast growth of 4.58 percent it made in August.

  But Daniel Melser of Moody's Economy.com warned that weakening demand for Taiwan's goods because of a slowing US economy posed a potential headwind for the local economy.

  "Growth looks now to have peaked on the island," Sydney-based senior economist Melser said in a statement yesterday.

  Melser said uncertainty remains high because of concerns over the impact of the subprime mortgage problem in the US and a recession is likely to develop in the world's largest market.

  "This would be a major blow to the island's exporters. Added to this is a mild slowing of growth in mainland China -- Taiwan's number one export market," he wrote.

  Deutsche Bank economist Juliana Lee said that the strong growth momentum -- evidenced by a much stronger third-quarter GDP expansion and growth in export orders this quarter -- may not last long.

  "[It] may give way to a much weaker growth in the coming quarter as the US and the Euroland GDP growth slow on the back of the US subprime fallout," Hong Kong-based Lee said in an e-mailed statement yesterday.

  Lee said the upside in the latest economic growth figure came from the external sector, which only reflects a "growing reliance of the Taiwan economy on exporters," she said.
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