beyondbrics

For all its technical and electronic wizardry, there have always been natural seasons to the sale of consumer electronics: a sluggish start, especially in February, with the end of the summer through to Thanksgiving and Christmas the busy period.

But this year, the seasonal rhythm is disrupted. Economic woes in the US and Europe are contributing to a continued slow-down in exports and even the tech industry is not immune. This is reflected in Taiwan’s export data, given the island’s tech-focused, export-oriented economy.

Taiwan’s export orders, which typically lead actual export data by around two months, weakened yet again in September, according to official data. September’s orders were still up 2.7 per cent from a year ago but they fell 1.8 per cent from August. The fall in tech orders outpaced that decline with a 2.1 per cent drop from August.

Economists had long expected Taiwan’s economy to slow in the second half of this year, but woes in the tech industry are particularly bad news for Taiwan. The last time the island’s economy had been hit sharply was in the aftermath of the global financial crisis, but by early 2009 tech sales had recovered – helped by the popularity of smartphones and netbooks – and tech exports had helped pull Taiwan’s economy back up out of recession.

This time it appears that even the tech companies can’t save Taiwan.

JP Morgan economist Grace Ng said she expects that “the Taiwan economy, in particular the export sector and the manufacturing industry, will continue to face external headwinds.”

One piece of good news from the September numbers, however, is that “orders from China, having fallen steadily since early this year, appeared to have started showing some moderate uptick,” Ms Ng said.

It may not be enough to make up for the fall in orders from Europe and the US, but with Taiwan’s economy increasingly geared towards selling to the Chinese, perhaps there’s hope yet for Taiwan.

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