Taiwan's exporters face a further decline in orders this month as the global economy slows and cuts demand, more bad news for Asia's exporting economies after the island's orders shrank for a fourth straight month in June. Taiwan's export orders are a leading indicator of demand for Asia's exports and for high-tech gadgets, and typically lead actual exports by two to three months.
They fell 2.62 percent in June, roughly in line with a Reuters poll's median forecast of a 2.3 percent decline, but ticked up 0.42 percent from the previous month. The government predicted a further slide in July, and by more than June, citing a high base effect and a weak economy, adding to signs that the worst may be still to come for the region's exporters.
"The figure doesn't improve much from May, showing that there's a lack of catalysts. Q3 is supposed to be a high season, export orders should have grown but they didn't," said Cheng Cheng-mount, economist at Citi in Taipei. "We are ready to cut second-half export orders forecasts this week. Even though we still see a recovery, the momentum is weak. End demand for electronics is not strong," he said.
Taiwan is one of the most exposed among Asian exporting economies to fluctuations in overseas demand, particularly for high-tech items. On Thursday, one of its top exporters, Taiwan Semiconductor Manufacturing (TSMC), predicted a slowdown at the end of the year. The company said many of its clients had built up inventory in the hopes of a quicker global rebound, but now are stuck with it as the slowdown persists longer than thought.
TSMC's global peers have also predicted weaker times ahead. Top chipmaker Intel Corp and chip gear maker Applied Materials Inc have cut their full-year sales forecasts, while Qualcomm Inc cut its revenue and earnings forecast for the current quarter but predicted a stronger fourth quarter.
Comments
Comments are closed.