Two more foreign institutes have lowered their forecasts for the nation’s GDP growth on concerns that the global financial crisis is hitting its export-driven economy harder than expected.
The IMF and Standard Chartered Bank yesterday projected that the economy would shrink by 7.5 percent and 3.5 percent respectively this year, mainly because of a sharp decline in exports and private investment.
“The impact of the global crisis on economies in Asia has been surprisingly heavy,” the IMF said in its latest report on the global economic outlook.
Its forecast of a 7.5 percent contraction in Taiwan’s GDP growth would put the country behind South Korea and Hong Kong, but ahead of Singapore, which is expected to see a 10 percent contraction.
In January, the IMF estimated a contraction of 4 percent for Taiwan’s economy this year.
Standard Chartered Bank revised its projection to minus 3.5 percent growth from minus 1.5 percent three months ago.
“Taiwan’s economy remained depressed in the first quarter following a record 8.4 percent drop in the fourth quarter [of last year],” Tony Phoo (符銘財), the bank’s chief economist in Taipei, told a media briefing.
Phoo said grim data for the first three months had prompted the adjustment, adding that a recovery was unlikely until next year.
“Declines in exports, industrial output and capital-goods imports may have caused GDP to contract another 7.2 percent” in the first quarter, Phoo said.
Outbound shipments, a mainstay of the economy, are likely to drop 36 percent and 30 percent in the second and third quarters respectively, after falling 36.6 percent in the first quarter from the same period last year, the economist said.
He put the fourth-quarter decline at 6 percent.
Sagging private investment, another drag on the economy, is not expected to pick up any time soon because of the uncertain economic outlook, Phoo said.
But the worst of the down cycle is probably over and the recession will decelerate to 4.7 percent, 1.4 percent and 0.5 percent for the remaining three quarters, he said.
While the IMF projects zero growth for Taiwan next year, Standard Chartered predicted positive growth of 2.6 percent next year, boosted by trade with China.
“Warming cross-strait ties are starting to bear fruit, especially in the tourism and logistics sectors,” Standard Chartered said in a report yesterday. “The number of Chinese tourists applying to visit Taiwan reached the daily limit of [3,000] in April.”
If the number of Chinese visitors increases by 1 million per year, GDP could expand by 0.3 to 0.4 percentage points, not including induced effect, Phoo said.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
Cryptocurrencies gave a lukewarm reception to US President Donald Trump’s first policy moves on digital assets, notching small gains after he commissioned a report on regulation and a crypto reserve. Bitcoin has been broadly steady since Trump took office on Monday and was trading at about US$105,000 yesterday as some of the euphoria around a hoped-for revolution in cryptocurrency regulation ebbed. Smaller cryptocurrency ether has likewise had a fairly steady week, although was up 5 percent in the Asia day to US$3,420. Bitcoin had been one of the most spectacular “Trump trades” in financial markets, gaining 50 percent to break above US$100,000 and
RSS