HONG KONG: Taiwan's export orders in January dropped 42 percent, a historical low, indicating that the slump in global demand is worsening and more export-oriented Asian countries will record gloomy export figures.

Taiwan's export orders, a barometer for global electronics demand because of its technology industry, have been falling every month since October, and the data has provided a leading indicator on exports from other Asian countries.

"We won't be surprised to see another poor record in February; Taiwan and Korea are most exposed to the weakening demand," said Christopher Wong, an economist at HSBC in Hong Kong.

The bank predicts Taiwan may record around a 30 percent drop in exports next month.

Exports from Japan, the mainland and South Korea headed south starting around July, three months after Taiwan's exports took a sharp turn for the worse, data shows.

"Based on the previously announced January exports, this drop is within our expectations. The main reason for the decline in export orders is still mostly the mainland market," Tony Phoo, an economist at Standard Chartered, said in a statement.

The figures also pointed to a deepening recession for Taiwan. Last week, the local government reported the economy contracted in the fourth quarter by a record 8 percent, prompting the central bank to cut interest rates a quarter of a percentage point to a record low 1.25 percent.

The "economics ministry" said export orders fell 41.67 percent from a year earlier, broadly in line with expectations in a Reuters poll for a drop of 41 percent, and deeper than a 33 percent decline in December.

It also said January's industrial production, closely related to exports, dropped 43.11 percent from a year earlier, a slide that is also picking up from December's 32 percent fall. A Reuters poll had produced a median forecast of a 39 percent drop.

The island's actual exports in January fell at a record pace of 44 percent.

Japan and South Korea have both reported record declines in exports, and the mainland has said its exports have fallen for two-straight months, reflecting deepening recessions in main demand centers such as the US and Europe.

This week, both Malaysia and Thailand forecasted that exports would fall in 2009.

Analysts said the figures were distorted by the Chinese New Year holiday, which occurred in January this year but February in 2008.

The latest data showed that orders from the US, Europe and Japan slumped more than 30 percent, while combined orders from the mainland and Hong Kong more than halved.

Electronics export orders dropped 39 percent from a year earlier. All other major categories fell at least 30 percent, the data showed.

Reuters contributed to this story

(HK Edition 02/25/2009 page16)