Taiwan February exports suffer double-digit fall again, adding to gloom

Taiwan's exports shrank for a 13th straight month in February on weak demand from China and elsewhere, indicating recovery for Asia's exporters is some way off and increasing pressure on the island's central bank to cut interest rates again.
The February export numbers, which were slightly better than forecast, came shortly after the government slashed its 2016 economic growth outlook to 1.47 percent, projected a quarterly shrinkage for January-March and warned exports this year will contract again. February exports fell 11.8 percent on year, the finance ministry said on Monday, compared with 13 percent in January. A Reuters poll forecast a 12.75 percent drop. But the outlook, already gloomy with projected 0.64 percent shrinkage in gross domestic product in the first quarter, is not brighter for coming months. "It would be difficult for exports to turn positive in the first half of this year," Yeh Maan-tzwu, the ministry's statistics director, told a briefing.
Taiwan's trade-dependent economy has been hurt by soft demand, particularly from its biggest trading partner China. The January-February trade figures tend to be distorted by the week-long Lunar New Year holiday. The festival began on February 8 this year. Exports in the first two months contracted 12.4 percent from the year earlier. Shipments to China contracted 13 percent, versus a 19.3 percent fall in January.
Shipments to the United States fell 13.8 percent on year, compared with January's 5.8 percent drop. Exports to Japan and Europe fell 9.2 percent and 4.7 percent, respectively, compared with a 1.8 percent fall and 3.4 percent growth. Export orders - an indication of the strength of Asian exports and of global demand for technology products in particular - have slumped for 10 months in a row. February orders will be reported later this month.
According to the February purchasing managers' index (PMI) by Nikkei, Taiwan factory activity contracted for the first time in three months and new export orders contracted for a second month. The central bank's next quarterly policy meeting is on March 24. It cut its discount rate by 12.5 basis points in September and again in December.