Taiwan exports fall again; economy still in recession

Taiwan’s exports plunged by more than expected in December, which might keep the trade-reliant economy in recession in the fourth-quarter and could mean the central bank cuts interest rates again. December exports were down 13.9% from a year earlier, an 11th straight decline, the finance ministry said yesterday. A Reuters poll forecast a 13.15% fall and November had a 16.9% slide. Exports for 2015 fell 10.6%, the biggest annual drop since a 20.3% contraction in 2009, due to sluggish demand from China and other global markets. In 2014, exports jumped 2.7%, thanks to Apple Inc’s iPhone. Trends in Taiwan’s exports are a gauge for global technology product demand. Taiwan’s economy slipped into recession in the third-quarter. The central bank cut interest rates in September and December. “There is still no sign Taiwan’s economy will pick up into the first-half of 2016,” Andrew Tsai, an economist of KGI Securities, Taipei, said before the data was released. “With the global economy in such a tough situation, there is room for the central bank to slash the rate by 12.5 basis point each in Q1 and Q2.” Fourth-quarter gross domestic product (GDP) data will be announced on January 29. Taiwan is home to many suppliers that make components or assemble gadgets for global brands such as Apple. Foxconn, which assembles most of the latest iPhones, will cut working hours over the week-long Lunar New Year holiday, a person familiar with the matter said on Wednesday, a rare move analysts interpreted as a sign of softening demand. Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chip maker, said its December sales fell both on-month and on-year. The annual growth in sales for 2015 more than halved from the rapid pace of 2014, when new iPhone 6 models were launched. December exports to China fell 16.4%, compared with a 19.6% slump in November. Exports to the US fell 7.3%, after contracting 10.9% in November. For all of 2015, exports to China were down 12.3%, and to the US by 1.7%. Imports fell 15.6% in December against the forecast 13.2% drop and the 13.7% fall in November. “Electronics export momentum is expected to pick up gradually,” the finance ministry said. “However, outlook of Taiwan’s exports will be dented by the slowdown of global economic growth, growing international competition, falling raw material prices and China’s expanding capacity.”