Taiwan's October exports slumped, marking the biggest contraction since December 2001 due to weak demand for integrated circuit chips, laptops and phones amid the global economic slowdown.

Export orders, an indication of shipments in the next one to three months, fell 5.56 percent in October from a year earlier after rising 2.82 percent in September, the Ministry of Economic Affairs said in a statement yesterday. The drop was bigger than a market estimate of 3.03 percent.

Orders for electronics goods fell 1.74 percent, from a rise of 3.19 percent in September. Demand for information, technology and communications products rose 11.9 percent after increasing 10.61 percent in the previous month.

Industrial production fell 12.55 percent in October from a year earlier, compared with a revised 1.22 percent decline in September.

Orders from the mainland and Hong Kong, which account for about one-third of exports, fell 22.84 percent from a year earlier, the largest drop since 2001, after declining 10.79 percent in September.

Export orders from the US, Taiwan's second largest market, dropped 6.99 percent in October, compared with a 2.29 percent decline in the previous month.

Analysts expect Taiwan's economy to follow Hong Kong, Singapore and Japan into recession. They also expect Taiwan's export orders to decline in the coming months on fears of a global recession.

Huang Ji-shih, the economic ministry's chief statistician, said in a news conference that demands for flat panel displays are quite sluggish, affecting the overall orders performance.

KGI Securities' analyst Fang Wen-yen said the October figures are worse than expected and estimated that fourth-quarter export orders will fall by around 5 percent.

Citigroup's economist Cheng Cheng-mount said it looks like export orders are still thinning, noting that the main reason is weaker demand from the mainland.

"If we look at the different industries, orders for LCD screens, electronics and chemicals are decreasing, and so it's really too early to talk about any recovery," Cheng said.

Agencies contributed to the story

(HK Edition 11/25/2008 page2)