Taiwan - a hi - tech manufacturing base that is hitting hard times as orders from the Western consumers fall off a cliff
As Europe reels with shock and manufacturing industry sees, cutbaks in capital expenditure, production , staff, inventory it is worth remebering what is happening in the areas in Asia who also enjoy low wage costs, a well educated work force and a hi tech product base. Like Taiwan.
Taiwan (Pop. 23 Mn) has recorded the biggest ever decline in GDP yer on year of 836% - the biggest since records began in 1952. The result is Governor Perng Fai-nan and Taiwan’s central bank cut interest rates yesterday to a record low of 1.25%, the 7th cut since September.
The Taiex stock index, which dropped 46 % in 2008, rose just 0.2% today on the news . Taiwan’s currency dropped to NT424.682, the lowest level in more than five years against the U.S. dollar.
Taiwan Semiconductor Manufacturing Co Ltd . computer chip manufacturer (Mkt Cap US$40 Bn.) and Quanta Computer Inc. who make most of the worlds laptops have been badly hit .Like many companies are cutting capital expenditure as they see domestic retail sales fell 9.8 % in December, the bigest / fastest drop since records began in 1999.
Unemployment rose to 5 % in December, the highest since 2003, amid major job cut announcments including Hon Hai Precision Industry Co., which makes iPhones and iPods for Apple Inc. PC's for Dell, HP, PlayStation 2 and PlayStation 3 for Sony; the Wii for Nintendo, the Xbox 360 for Microsoft, cell phones for Motorola, and Amazon Kindle. They eploy 166, 000 world wide.
Quanta Computer, said this week lap top shipments will decline more than 30 % this current quarter. Taiwan Semi in December forecast its first quarterly loss since 1990 as customers including Texas Instruments Inc. reduced their orders.
Exports, which are equivalent to 70 % of GDP, will decline 20 % in 2009 and business investment will tumble more than 28 % the Government says the economy won’t return to growth until the fourth quarter.
China and Hong Kong combined bought about 41% of its exports in 2007 often as parts for assembly into hi - tech hi- end consumer electronics, flat scren Tv's i-Phones, i-Pods, lap tops, mobile phones.
President Ma Ying-jeou’s administration plans stimulus spending of NT$858.5 billion ($25 billion) over four years, equivalent to about 6 percent of GDP, on infrastructure projects, consumer grants and tax cuts. It handed out NT$82.9 billion of shopping vouchers last month, which the statistics bureau forecasts added 0.66 percentage points to GDP.
Japan’s economy also contracted an annualized 12.7 % last quarter, the biggest drop since 1974. The Bank of Japan is about to publish details of their plan of buying corporate bonds and may prolong lending programs in place to avert a shortage of credit from deepening the worst postwar recession, economists said.
Singapore’s GDP declined by a record 16.9 % in the fourth quarter. The government is cutting corporate taxes, giving cash grants to companies to retain workers and plans to spend S$20.5 billion (US$13.4 billion).