Taiwan’s Rate of Economic Growth Slows

Statistics released over the weekend suggest that Taiwan’s economic boom is slowing moderately as a strengthening of the local currency and the central bank’s tight money policy take their toll.

Industrial production rose 3.73% in May from a year earlier, its slowest rate this year, the Economics Ministry said.

Output fell 0.53% from April on a seasonally adjusted basis, partly due to weakness in such export-related sectors as textiles, the ministry said.

It also announced that export orders for Taiwanese goods in May fell 3.55% from April to $6.94 billion, though they were up 6.04% from a year earlier.

In the first five months of this year, export orders climbed 7.89% from a year earlier to $32.8 billion.

May orders were hit by a rare drop in demand from Hong Hong. Hong Kong orders fell 5.63% from a year earlier to $922 million. The Commercial Times, a leading economic daily, said it was the first fall in three years.

Exports to Hong Kong had been growing rapidly, since the British colony is the main conduit for Taiwan’s booming trade with China. Taipei bans direct trade with China for political reasons.

Analysts said the May figure for Hong Kong was probably exceptional and orders should revive shortly. But exports were also being curbed by strong appreciation of the Taiwan dollar against the U.S. dollar, they said.

Boosted by the island’s trade surplus and with interest rates well above U.S. rates, the Taiwan dollar climbed 1.5 cents to a record high of $24.7140 Saturday.

Economists are also concerned about the government’s efforts to control inflation by keeping credit tight. The central bank raised its key rediscount rate 0.25 percentage point to 6.125% last month.

Early this year economists predicted Gross National Product growth of about 7% in 1992, compared with 7.3% last year.