Economists at home and abroad had different takes yesterday on the impact of the credit crisis on Taiwan, with a Taipei-based think tank putting the GDP growth forecast for next year at 4.08 percent, while a top French bank lowered the figure to 2 percent.
The Taiwan Institute of Economic Research (TIER, 台經院) put the GDP growth projection for next year at 4.11 percent, higher than 4.08 percent forecast for this year, on bigger public and private investment spending that is expected to replace exports as the main economic driver.
But BNP Paribas, France’s largest financial service provider, sketched a gloomier picture, saying the raging financial storm will hurt manufacturers worldwide and restrict Taiwan’s GDP growth to 2 percent next year.
TIER president David Hong (洪德生) said the nation may post an economic growth rate of 4.08 percent next year even though the full impact of the financial storm is yet to be assessed.
“It remains to be seen when the financial storm will end,” Hong told a news conference. “But we expect the [domestic] economy will start a slow but steady recovery in the second half of next year when the impact of a number of public works projects will be felt.”
The government has proposed increasing its investment expenditure for next year to 17.67 percent, from 10.07 percent this year, Hong noted, adding that private sectors will follow suit and boost their investment spending to 6.54 percent from a negative growth this year.
“Private investment, rather than exports, will fuel the dynamism for economic upturn,” Hong said. “Greater investment will ease unemployment and encourage private consumption that will grow to 1.63 percent next year.”
Exports, the mainstay of the nation’s GDP upturn in recent years, are expected to decline to 4.4 percent next year, from a projected 5.6 percent this year, the economist said, attributing the downshift to falling demand from trade partners across the world.
Hong said inflation will pose no threat next year when crude oil is expected to cost an average of US$60 a barrel.
Paul Mortimer-Lee, a London-based global head of market economics for BNP failed to share the optimism.
Mortimer-Lee told a separate press briefing global manufacturing will suffer because of weakening US demand.
“The crisis is bad, really bad,” he said. “Weak US demand will hurt exporters including Taiwan, in light of its export-oriented economy.”
Mortimer-Lee said the nation may achieve a GDP growth of 2 percent next year and raise the number to 4.7 percent in 2010.
As investors tend to move their capital home, the economist predicted the demand for the US dollar will remain strong in the near future with the New Taiwan dollar trading at an average of NT$34 against the greenback for the rest of this year.
He expected the local currency to depreciate to NT$35 in the first quarter of next year and strengthen to NT$33.5 at the end of next year.
Mortimer-Lee voiced concern the rate cuts by the Federal Reserve and other central banks may lead to deflation or a repeat of tough inflation.
“We’re having a financial crisis never seen since World War II,” he said. “No one can tell where the bottom is … Unemployment will go up and earnings down.”
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$7.5 billion into its US subsidiary, the Department of Investment Review said in a statement. The department approved TSMC’s application of investing in TSMC Arizona Corp, which is engaged in the manufacturing, sales, testing and design of IC and other semiconductor devices, it said. The latest capital injection follows a US$5 billion investment for TSMC Arizona approved in June. The chipmaker has broken ground on two advanced fabs in Arizona with aggregated investments approved by the department totaling US$24 billion thus far. According to TSMC, the first Arizona
The lethal hack of Hezbollah’s Asian-branded pagers and walkie-talkies has sparked an intense search for the devices’ path, revealing a murky market for older technologies where buyers might have few assurances about what they are getting. While supply chains and distribution channels for higher-margin and newer products are tightly managed, that is not the case for older electronics from Asia where counterfeiting, surplus inventories and complex contract manufacturing deals can sometimes make it impossible to identify the source of a product, analysts and consultants say. The response from the companies at the center of the booby-trapped gadgets that killed 37
FRIENDLY TAKEOVER: While Qualcomm Inc’s proposal to buy some or all of Intel raises the prospect of other competitors, Broadcom Inc is staying on the sidelines Qualcomm Inc has approached Intel Corp to discuss a potential acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the biggest-ever merger and acquisition deals. California-based Qualcomm proposed a friendly takeover for Intel in recent days, said the sources, who asked not to be identified discussing confidential information. The proposal is for all of the chipmaker, although Qualcomm has not ruled out buying some parts of Intel and selling off others. It is uncertain whether the initial approach would lead to an agreement and any deal is likely to come under close antitrust scrutiny
SECURITY CONCERNS: The proposed ban on Chinese autonomous vehicle software and hardware would go into effect with the 2027 and 2030 model years respectively The US Department of Commerce today is expected to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on US roads due to national security concerns, two sources said. US President Joe Biden’s administration has raised concerns about the collection of data by Chinese companies on US drivers and infrastructure as well as the potential foreign manipulation of vehicles connected to the Internet and navigation systems. The proposed regulation would ban the import and sale of vehicles from China with key communications or automated driving system software or hardware, said the two sources, who declined to be identified because the