Taiwan’s machine tool exports are expected to decline 15 percent this year from US$4.24 billion last year, as the global economy has not significantly improved, the Taiwan Association of Machinery Industry (TAMI) said yesterday.

Europe is still mired in its debt problems, the US will end its quantitative easing soon and China has not yet proposed new large-scale stimulus plans since Chinese President Xi Jinping took power, TAMI president Wang Cheng-ching said.

"Consumption around the world remains low, making companies unwilling to increase capital spending and purchase more machine tools,” Wang said, adding that machine tool output in Japan, China and Europe are expected to decline this year.

From January through last month, Taiwan’s machine tool exports dropped 19.1 percent to US$3.25 billion from a year ago, according to the latest industrial data compiled by the Taiwan Machine Tool & Accessory Builders Association (TMBA).

Exports to the US declined the most, by 25.6 percent to US$392.04 million during the first nine months from a year ago, the data showed.

Wang said Taiwan will lag South Korea in machine tool exports to the US starting this year.

Hyundai Motor Co is building a new factory in the US, which will be capable of making 300,000 cars a year, and increase its purchase of machine tools from South Korea, Wang said, adding that the free-trade agreement between the US and South Korea and the depreciation of the South Korean won also are likely to help boost its machine tool exports to the US.

According to Wang, from 2007 through this month, the New Taiwan dollar appreciated 11.2 percent against the US dollar, while the South Korean won depreciated 12.5 percent against the greenback. Taiwan’s machine tool exports also face a tariff of between 3 percent and 5 percent when entering the US market, he said.

However, Taiwan’s machine tool exports during the remaining months of the year may rise slightly from the previous year as local companies secured orders from the Machine Tool World Exposition in Hannover, Germany, last month, TAMI said.

Taiwan’s overall machinery exports this year are expected to decline by 3 percent from US$11.56 billion last year, Wang said on the sidelines of a ceremony for inking a cross-strait memorandum of understanding (MOU) with the China Machinery Industry Federation.

Under the MOU, both sides agreed to urge Taiwanese and Chinese governments to decrease tariffs on the remaining 65 items of lathes under the Economic Cooperation Framework Agreement.

Although China was the largest export market for the sector in Taiwan last year, Taiwan’s machine tool exports of US$1.49 billion to China last year accounted for only 3.8 percent of the Chinese machine tool market, the association said.