January trade posts fifth monthly drop

Exports during the month amounted to US$12.37 billion, representing a decline of NT$9.76 billion or 44.1 percent year-on-year, the Ministry of Finance (MOF) reported yesterday.

The figure represented the fifth consecutive drop due to the impact from international financial crisis and weakening demand.

The country's import trade, meanwhile, totaled US$8.97 billion in the first month of 2009, marking a negative growth of 56.5 percent over that posted in the same month of 2008, according to the MOF statistics.

Factors for the sharp decline included falling prices of crude and other raw materials and decreased purchase of capital goods and equipment by Taiwan companies.

Taiwan still posted a trade surplus of US$3.4 billion for January, marking a year-on year increase of 124.6 percent, the MOF said.

A MOF official said that if the Chinese New Year holidays were excluded, Taiwan's exports totaled US$9.36 billion in the first 23 days of January, marking a year-on-year fall of 34.9 percent.

The fall represented a mild improvement compared to December 2008, when Taiwan's export trade declined 41.9 percent, the official noted.

Exports of Taiwan companies to China and Hong Kong reached US$3.71 billion in January, diving by 58.6 percent from the same month of 2008 to extend the consecutive drop to five months. The drop was also the steepest on record.

But following the seasonal adjustment, the decline shrank to 50.4 percent, slightly lower than the decrease of 54 percent registered in December.

On the financial market, the Taiwan dollar weakened 0.6 percent to NT$33.96 against the U.S. dollar at the 4 p.m. close of trade in Taipei, after strengthening as much as 0.4 percent.

The Taiwan currency fell in the last minute of trading, reversing an earlier advance, on speculation the central bank sold its own currency to support the economy after exports continued declining in January.

Foreign exchange traders pointed out that the currency of South Korea, one of Taiwan's key export competitors, slid by more than 50 percent last year.

Under the pressure of depreciation of Korean currency, it would be difficult for the Taiwan dollar to rise in at least the near future, they said.

To bolster the domestic consumption, the government has worked out stimulus plans with projected spending of NT$858.5 billion over four years.

The total amount, equivalent to 6 percent of gross domestic product, will be focused mainly on infrastructure projects, consumer handouts, tax cuts, and create new job opportunities.

Among the short-term actions, the government distributed NT$82.9 billion worth of shopping vouchers last month to boost domestic demand.

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