R 120351Z MAR 09
FM AIT TAIPEI
TO SECSTATE WASHDC 1101
DEPT OF TREASURY WASHDC
INFO DEPT OF COMMERCE WASHDC
AMEMBASSY BANGKOK 
AMEMBASSY BEIJING 
AMEMBASSY SEOUL 
AMEMBASSY SINGAPORE 
AMEMBASSY TOKYO 
AMEMBASSY MANILA 
AMEMBASSY JAKARTA 
AMEMBASSY KUALA LUMPUR 
AMEMBASSY HANOI 
AMEMBASSY CANBERRA 
AMEMBASSY WELLINGTON 
AMCONSUL HONG KONG 
AMCONSUL SHANGHAI 
AMCONSUL GUANGZHOU

UNCLAS AIT TAIPEI 000271 
 
 
STATE PLEASE PASS USTR 
STATE FOR EAP/RSP/TC, EAP/EP 
USTR FOR ALTBACH AND STRATFORD 
USDOC FOR 3132/USFCS/OIO/EAP 
TREASURY FOR OASIA/WINSHIP AND PISA 
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF 
GOVERNORS, SAN FRANCISCO FRB/TERESA CURRAN, AND NEW YORK FRB MARI 
BOLIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ECON PGOV PREL SENV ELAB EPET SENV TW
SUBJECT:  Taiwan's February Trade Figures Show Continued Weakness in 
Exports 
 
SUMMARY AND INTRODUCTION 
------------------------ 
¶1. (U) Taiwan exports again took a tumble in the first two months of 
¶2009.  Although the decline in February (28.6% y-o-y) was 
substantially less than the 44.1% drop in January, this is largely 
due to the fact that the week long Lunar New Year holiday fell in 
January 2009 rather than in February as in 2008.  Exports have not 
hit bottom.  END SUMMARY AND INTRODUCTION. 
 
True Picture 
------------ 
¶2. (U) To iron out the holiday factor, it may be best to look at the 
combined numbers for January and February.  Taiwan's exports in 
these two months totaled US$25 billion, down 37% y-o-y compared to a 
contraction of 25% in the fourth quarter (Q4) of last year.  Imports 
in January-February were US$20 billion, down 45.6%, which is nearly 
double the contraction of 23% in Q4 last year. 
 
Falls in Shipments from Taiwan to Developed Markets 
--------------------------------------------- ------ 
¶3. (U) Weak demand for Taiwan products from major developed 
economies caused direct shipments from Taiwan to these markets to 
fall.  In the first two months of this year, shipments to the United 
States dropped 26% to US$3.8 billion, to the EU 33% to US$3.0 
billion, and to Japan 14% to US$2.2 billion. 
 
¶4. (U) Shipments to Taiwan's offshore export bases plunged even 
more.   Shipments to China (including Hong Kong) fell 44% to US$8.7 
billion.  Shipments to ASEAN dropped 45% to US$3.4 billion.  Most of 
these exports are likely intermediate goods eventually re-exported 
to other markets. 
 
Fewer Investment Cuts in Capital Goods Imports 
--------------------------------------------- 
¶5. (U) Taiwan manufacturers report hefty inventory and low capacity 
utilization rates.  These rates have fallen below 50% for the DRAM 
and flat panel industries.  Reduction in capital expenditure 
contributed to a 40% cut in capital goods imports to US$3.2 billion 
in the first two months of this year.  Imports of raw materials and 
intermediate goods also dropped 50% to US$8.1 billion.  The cause 
for the drop was steady declines in energy, metal, and grain prices. 
Taiwan's imports from Saudi Arabia in January-February, for 
example, plunged by half. 
 
COMMENT 
------- 
¶6. (U) As world growth falters, Taiwan export-reliant economy 
continues to suffer.  The export picture remains bleak, and 
prospects for a turnaround are dim until it brightens.  END 
COMMENT. 
 
YOUNG