The worst of the financial sector crisis is over although the impact on the broader economy will likely drag on in coming months, IMF managing director Dominique Strauss-Kahn said yesterday.
“There are good reasons to believe that the largest part of disclosure in financial institutions has been done, especially in the United States ... so that the worst news is behind us,” he told a panel at the European Parliament.
“The main problem is the linkages between the financial crisis and the real economy and this is not behind us,” he added, estimating the impact of the financial turmoil to weigh on economic activity for another “several quarters.”
Economic growth has lost pace in most major economies recently in the wake of a slump in the US housing market, which has triggered extreme financial market volatility and reluctance among banks to make all but the safest loans.
After months of nerve-wracking swings in financial markets, optimism has begun to emerge among market participants that the worst of the storm has blown over since the collapse of the US investment bank Bear Stearns in the middle of March.
While past financial crises tended to be triggered by problems in developing countries, often with current account problems, Strauss-Kahn warned that in the long term the recent turmoil would likely be “a taste of the new kind of crisis that we are going to face.”
With big developed economies such as the US and Europe slowing following the turmoil, Strauss-Kahn said that emerging countries would be the biggest motors behind world economic growth this year.
Nevertheless, he insisted that such fast-growing economies would also eventually feel the impact of the slowdown in rich countries, although perhaps with “some delay.”
“In no way is there some sort decoupling” between economic growth trends in developed countries and emerging economies, he said, weighing into one of the hottest debates currently in economics.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
GEOPOLITICAL ISSUES? The economics ministry said that political factors should not affect supply chains linking global satellite firms and Taiwanese manufacturers Elon Musk’s Space Exploration Technologies Corp (SpaceX) asked Taiwanese suppliers to transfer manufacturing out of Taiwan, leading to some relocating portions of their supply chain, according to sources employed by and close to the equipment makers and corporate documents. A source at a company that is one of the numerous subcontractors that provide components for SpaceX’s Starlink satellite Internet products said that SpaceX asked their manufacturers to produce outside of Taiwan because of geopolitical risks, pushing at least one to move production to Vietnam. A second source who collaborates with Taiwanese satellite component makers in the nation said that suppliers were directly
Top Taiwanese officials yesterday moved to ease concern about the potential fallout of Donald Trump’s return to the White House, making a case that the technology restrictions promised by the former US president against China would outweigh the risks to the island. The prospect of Trump’s victory in this week’s election is a worry for Taipei given the Republican nominee in the past cast doubt over the US commitment to defend it from Beijing. But other policies championed by Trump toward China hold some appeal for Taiwan. National Development Council Minister Paul Liu (劉鏡清) described the proposed technology curbs as potentially having
EXPORT CONTROLS: US lawmakers have grown more concerned that the US Department of Commerce might not be aggressively enforcing its chip restrictions The US on Friday said it imposed a US$500,000 penalty on New York-based GlobalFoundries Inc, the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯). The US Department of Commerce in a statement said GlobalFoundries sent 74 shipments worth US$17.1 million to SJ Semiconductor Corp (盛合晶微半導體), an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to the department’s trade restriction Entity List in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing. Exports to firms on the list