05.23.2001
It's all quiet (again) on the trade front

• Export orders fell 6.6% YoY in April, the largest decline on record for the month. Largely in line with expectations, orders from the US slumped 8.8% YoY, while orders from the EU clocked a steep 21.0% slide.

• In terms of product breakdown, electronics orders led the way with the largest drop of 15.5% compared to April 2000, followed by telecom with a 7.4% contraction. One surprise came from machinery orders, which rose 2.1% in April after falling 19.7% YoY in 1Q01. While we are not suggesting this upturn is an established trend, it is worth noting that in April machinery orders from overseas turned positive. We will be waiting for follow up numbers in the months ahead before determining the significance of the pattern. This would make more sense, especially since the machinery production index posted a large YoY fall of 9.8% in April. Meanwhile, the industrial production index fell 5.9% YoY, also in line with market expectations. The manufacturing index, which is dependent on exports, contracted 6.3% last month as global demand remains stagnant.

• We do not expect to see a turnaround in export orders and industrial production in the near future. We continue to maintain that export growth is likely to bottom out in July. However, from July onwards, exports will continue to contract, albeit at a slower pace.

• Ahead of the release of 1Q01 GDP growth figures, we have revised our 2001 GDP growth forecast down slightly to 3.5% from 3.7%. We forecast 1Q01 GDP grew only 2.7%, down from 7.9% in 1Q00, amid depressed global demand and fragile consumer confidence at home.

IrmakSurenkok@Primasia.com +886-[0]2-2547-8873