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UPDATE 2-Taiwan April exports shrink unexpectedly, China, Europe demand sputters
May 7, 2013 / 8:47 AM / in 4 years

UPDATE 2-Taiwan April exports shrink unexpectedly, China, Europe demand sputters

* Exports contract 1.9 pct y/y vs forecast +1.35 pct
    * Imports fall 8.2 pct vs forecast -2.7 pct
    * Q2 export growth rate could be below Q1


    By Faith Hung and Jeanny Kao
    TAIPEI, May 7 (Reuters) - Taiwan's exports shrank
unexpectedly in April as sales to China and Europe sputtered,
underscoring increasing fragility in global demand, especially
for the island's high-tech products. 
    April exports fell 1.9 percent from a year earlier, much
worse than the 1.35 percent growth forecast in a Reuters poll
and compared with growth of 3.3 percent in March.
    Exports to China stalled, inching up a scant 0.2 percent,
versus 5.2 percent growth in March, while exports to Europe
dropped 19.3 percent, a much faster contraction than the 12.3
percent decline recorded the previous month, the finance
ministry said on Tuesday.
    Shipments to the United States were the lone bright spot,
rising 4.9 percent after contracting 1.9 percent in March.
    "Exports in 2013 will be challenging," the ministry told a
news briefing, adding that year-on-year export growth in the
second quarter could be lower than the 2.4 percent seen in the
first quarter.
    Imports, much of which are used to produce finished goods
which are re-exported, fell 8.2 percent versus analysts'
expectations for a 2.7 percent decline, pointing to further
weakness for the trade-reliant local economy in the second
quarter.
    "This is a disappointing, but not entirely unexpected set of
numbers for Taiwan. The surprisingly weak industrial production
and export orders data for March foreshadowed April's weakness,"
said Katrina Ell, an analyst with Moody's Analytics in Sydney.
    "Let's just hope that 2013 doesn't turn out like 2012, with
one downside surprise after another."    
    Mainland China, Taiwan's biggest export market, is showing
signs of losing momentum. The closely-watched official
government Chinese PMIs showed slowing growth last week in both
services and manufacturing sectors. 
    Factory-sector activity in China stumbled in April to
further underline the impact of a fragile global economy, which
is under pressure from the euro zone recession. 
    "Chip shipments have been growing for a few month, and
electronics shipment are not doing bad, so the decline had to do
with slowing global growth," said Frances Cheung, a senior
strategist of Credit Agricole CIB in Hong Kong. 
     "I'm worried that exports in Q2 will be below expectations,
but looking into Q3, we're still confident about the recovery in
the U.S. and economic growth in China so exports should do
better in that quarter," Cheung added.
    Orders for Taiwan's exports in March unexpectedly shrank 6.6
percent from a year earlier, contracting for the second straight
month and heralding slowing momentum for some of Asia's
trade-reliant economies. Taiwan's export orders are a leading
indicator of demand for the region's exports and typically lead
actual exports by two to three months.
    Smartphone maker HTC Corp on Monday reported a 37
percent fall in April sales from a year earlier. 
    Asian suppliers to Apple Inc such as Hon Hai
Precision Industry, the world's largest electronics
contract maker, have also suffered as the U.S. tech giant's
growth rate slows. 
    Taiwan's economy grew by a much-slower-than-expected 1.54
percent in the first quarter from a year earlier, badly
undershooting forecasts as export growth fell short of
expectations and private consumption softened. 
    On a quarterly basis, gross domestic product (GDP)
contracted 0.8 percent from the December quarter, according to 
preliminary data released in late April.

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