March 20, 2020 / 8:49 AM / 13 days ago

UPDATE 1-Taiwan Feb export orders drop as virus threatens to hit demand

(Recasts, adds details)

* Feb orders -0.8% y/y vs -0.6% in Reuters poll

* Orders from China +0.1% y/y; U.S. +3.2%

* Ministry sees March orders between -13.2% and -9.3% y/y

* Ministry says growth momentum curbed by virus outbreak

By Yimou Lee and Liang-sa Loh

TAIPEI, March 20 (Reuters) - Taiwan’s export orders in February fell for a second month but at a far slower pace, with the government warning the coronavirus outbreak could hit demand for the island’s exports pivotal to the global technology supply chain.

February orders slipped 0.8% from a year earlier to $28.68 billion, data from Taiwan’s Ministry of Economic Affairs showed on Friday, partly helped by a low base in February 2019.

Orders had been expected to fall at a slower pace as the week-long Lunar New Year fell in February last year but occurred in January this year.

Economists in a Reuters poll had estimated orders would slip 0.6% compared with a 12.8% decline in January - the steepest in nearly seven years.

In a statement, the ministry said telecommunications products were down 23% from a year ago, as supply chains and production were affected by the outbreak of the coronavirus.

It added that growth in electronics orders, up more than 20% from a year earlier due to strong semiconductor demand, would have been higher if it weren’t for the virus outbreak, which the World Health Organization has described as a pandemic.

Growth momentum is likely to be curbed by the outbreak, which has “impacted production, investment and demand for end products” and the ministry will pay close attention to development, it added.

Some of Taiwan’s manufacturers, a key part of the global supply chain for tech giants such as Apple and Huawei , have already been hit by the virus fallout, which has led to disruptions in production and dampened demand for technology gadgets.

The ministry expects March export orders to fall between 13.2% and 9.3% from a year earlier.

It said, however, rising demand for new technologies, including fifth-generation telecommunications (5G) and artificial intelligence, will help boost sales in the coming months.

Taiwan’s central bank cut interest rates to a new low on Thursday and lowered its 2020 economic growth estimate to 1.92%, on mounting concerns over the global spread of the coronavirus.

Taiwan is rolling out a T$60 billion ($1.98 billion) package to mitigate the impact, offering loans to small businesses and even vouchers to spend on food at night markets, and says an extra T$40 billion is available to help soften the blow.

February orders from the United States rose 3.2% from a year earlier, compared with January’s 11.5% decline. Orders from China inched up 0.1% versus an 11.1% drop the previous month. European orders dropped 6.9% while those from Japan fell 19%. ($1 = 30.2350 Taiwan dollars) (Additional reporting by Ben Blanchard; Editing by Jacqueline Wong)

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