Taiwan’s orders rise more than expected, to a record

By Perris Lee, Bloomberg

Taiwan’s export orders climbed more than expected to a record in July on a surge in demand from China, Japan and Europe, signaling economic growth may quicken.

Orders, indicative of actual shipments in the next three months, rose 23.5 percent from a year earlier, accelerating from June’s 15.2 percent increase, the Ministry of Economic Affairs said in Taipei yesterday. That was higher than the 16 percent median estimate in a Bloomberg News survey of 16 economists.

Taiwan, South Korea and Japan are among Asian countries whose economies have been buoyed by demand from China and Europe in the face of a U.S. slowdown. Companies stocked up for back- to-school laptop sales and started preparing for the Christmas season, increasing demand for the island’s electronic exports.

“Taiwan’s GDP growth this year is being driven by exports,” said Wu Chung-shu, an economist at Academia Sinica in Taipei, Taiwan’s state-funded research institute. The report suggests the global economic expansion “is still going well.”

The report was released after the close of trading on the island’s stock exchange. The TAIEX index rose 2.8 percent to 8,732.84. Orders climbed to US$29.7 billion in July, a monthly record, according to today’s report. Exports are equivalent to more than half of Taiwan’s economy.

Orders from China and Hong Kong combined surged 24.7 percent in July, following June’s 15.6 percent gain.

Orders from Europe jumped 32.5 percent and those from Japan advanced 25.7 percent. Orders from the U.S. rose 6.5 percent, the smallest increase in three months.

“This is the beginning of a busy season, especially for exports of consumer electronics, with demand for products like flat panels increasing,” said Wenyen Fang, an economist at Taipei-based KGI Securities Co. “China clearly remained another demand driver.”

Sales of electronics typically rise at a faster pace in the second half because parents buy new computers for children after the summer break, and people purchase electronics such as digital music players as Christmas gifts.