Ominous Economic Indicators

Unpaid leave reintroduced at science parks in Hsinchu and Taichung as housing sales fall....

H&B Realty Co (住商不動產), the nation’s largest real-estate broker by number of franchises, reported a 5 percent fall in housing transactions last month, with the Greater Taipei area accounting for most of that, the broker said in a statement.

“More and more people share the view that cash is king after the global bourses tumbled last month,” Hsu said. “The strengthening US dollar is luring global capital away from emerging markets, including Taiwan, leaving real -estate assets less attractive.”

Hsu, who had previously expected the housing market to bounce back this quarter, now holds a neutral view.

The return of unpaid leave at science-based parks in Hsinchu and Taichung is also likely to weaken home sales in those areas, where transactions have so far been less affected by the introduction of a luxury tax in June because of their relative affordability, Hsu said.

Taiwan stocks post worst quarterly fall since the fourth quarter of 2008:

Taiwan stocks rose 0.6 percent on Friday, but ended the quarter 16.5 percent lower than the previous quarter, the biggest quarterly decline since the fourth quarter of 2008.

....

Stocks had fallen 3.2 percent in the first quarter and 0.35 percent in the second and stand down 19.5 percent for 2011 to date. In 2010 the index had risen 9.6 percent.

Further slowdown news.....the central bank refused to raise interest rates for the first time in five quarters....

Taiwan’s central bank refrained from raising interest rates, ending five straight quarters of increases as Asia’s policy makers seek to protect their economies from a faltering global recovery.

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Central banks from New Zealand to South Korea refrained from raising benchmark rates this month as Europe’s debt crisis and a struggling U.S. economy dimmed the outlook for the region’s exporters. A decline in Taipei home prices from a record earlier this year and slowing export-order growth have eased inflation pressures, weakening the case for further monetary tightening.

Raising interest rates makes money more expensive, meaning that people borrow less and growth slows. Keeping them stable means that credit did not tighten, implying that the central bank feared this round of growth was fragile.

A slow economy could be good news for the DPP at the January polls. But it is certainly bad news for all the people who have to suffer. With China looking to slow (at Counterpunch Mike Whitney argues things are grimmer than they look), the Eurozone a disaster area, and US elites clearly preferring to burn the Middle East than making the US grow, Taiwan could be in for a rough ride.

UPDATED: As Michael K points out below, the falling currency will be good for exports (but MJ, it will also be inflationary).
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