Taiwan exports plunge 23%, most in 7 years

Exports slid 23.3 percent in November from a year earlier, the Ministry of Finance said in Taipei yesterday, almost double the 12.4 percent median estimate of 12 economists surveyed by Bloomberg. The decrease, the sharpest since September 2001, was the third in a row, capping off the worst streak in six years.

“The decline in exports may continue for some time,” said Cheng Cheng-mount, an economist at Citigroup Inc. in Taipei. “Demand from China and the U.S. isn’t likely to recover as consumption in both economies will probably keep dropping.” Asia’s export-dependent economies are being battered by falling demand for their products amid recessions in the U.S., Europe and Japan and a slowdown in China. The prospect of a recession may prompt Taiwan’s central bank to cut interest rates again after four reductions since the global financial crisis deepened in September.

The value of exports fell to US$16.8 billion last month from US$20.8 billion in October, the ministry said. Imports slid 13.2 percent to US$15.3 billion as oil costs declined, leaving a trade surplus of US$1.5 billion.

Overseas shipments make up about 70 percent of gross domestic product. Taiwan’s economy shrank 1 percent in the third quarter from a year earlier, the first contraction since 2003. Slowing inflation also gives the central bank room to cut interest rates further on or before its quarterly policy meeting on Dec. 11. Consumer prices rose 1.88 percent in November from a year earlier, the slowest pace in 15 months.

The Central Bank of the Republic of China (Taiwan) lowered its benchmark interest rate to 2.75 percent on Nov. 9, the fourth reduction in two months.

Taiwan Semiconductor Manufacturing Co., the world’s largest producer of chips designed by other companies, cut its estimates for fourth-quarter sales and profit this month as the global slowdown crimped demand. The chipmaker also asked employees to take unpaid leave, extending cost-cutting moves.

Shipments to China and Hong Kong, Taiwan’s biggest overseas market, tumbled 38.5 percent last month after sliding 19.9 percent in October, because of weaker demand for electronic components used in products assembled for export. Shipments to the U.S., the island’s second-largest market, fell 14.2 percent. Exports to Europe slumped 9.8 percent, more than October’s 5.1 percent, the ministry said. Exports to Japan climbed 19.2 percent as a stronger yen boosting the nation’s buying power.

Shipments of electronic products slid 25.3 percent, accelerating from a drop of 8.4 percent in October.

AU Optronics Corp., the world’s third-largest maker of liquid-crystal displays, said on Dec. 4 that it may postpone production at two new plants after the global economic slump worsened an industry glut.

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