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Traffic moves at night in Taipei. The island is concerned as the growth rate is set to slow amid weak global recovery fears. Image Credit: Bloomberg News

Taipei: Orders for Taiwan's exports surged at a record pace in January, led by strong demand from China for the island's hi-tech products, but the growth rate looks set to slow amid worries that a global recovery may be weaker than expected.

Export orders to Taiwan, a bellwether for Asia's technology makers and an indicator of global demand, surged 71.8 per cent in January from a year earlier, the Economics Ministry said Thursday, buoyed by demand for IT products and components and by the Lunar New Year shopping season.

That was below a median forecast in a Reuters poll of a rise of 80.45 per cent but the highest monthly gain on record, surpassing the previous record annual gain of 52.63 per cent gain in December.

But the outlook is cloudy for export orders, with signs of weakening consumer confidence in the United States and Europe that point to lower demand for the flat-screen televisions and computers that dominate Taiwan's exports.

"I can tell that orders actually fell 4.3 per cent month on month. That would mean orders following the end of the Christmas season have slowed in the US and Europe," said Tony Phoo, economist at Standard Chartered Bank in Taipei.

"It will all come down to China, and unless China can pick up the slack left by the US and Europe, then these two months [December-January] are the peak. It shows that the recovery is still taking hold but the pace of recovery has slowed."

Data this week showed US consumer confidence in February unexpectedly slumped to a 10-month low while house prices fell, heightened concerns about the health of the world's largest economy. Germany also reported a surprise decline in business sentiment, hinting Europe's largest economy could slide back into contraction in the first quarter.

Bouncing back

Asian economies apart from Japan have bounced back strongly from the global crisis as strong Chinese demand cushioned the impact of persistently weak consumption in the United States and Europe. But a solid rebound in US consumption is needed in the long run to ensure a sustainable global recovery.

Taiwan's Au Optronics the world's No 3 maker of flat panels, said it had enjoyed good sales of larger screen LCD TVs in China during the Lunar New Year, which fell in February this year.