Taiwan exports slip 2.6%

Although it was better than expected, demand remains devastatingly weak.

According to BBVA Research, export orders in June came in slightly better than expectations, but still showed a contraction of 2.6% from a year earlier, indicating that demand remains weak through the 1st half of this year.

Here's more from BBVA:

Taiwan’s export orders are closely watched as an indicator of the regional export outlook, given Taiwan’s place in the global supply chain. Orders were weak across key destination markets, despite some marginal improvements in demand from Europe and China.

Expectations of an interest rate cut in the second half of 2012 have been rising, especially after the central bank lowered the interbank overnight rate recently. Though not in our baseline, the probability of a rate cut is rising given sluggish growth trends, although the authorities may stay cautious for now given their emphasis on containing inflationary pressures and a buildup in property prices.