Despite concerns that a US economic slowdown would have a negative impact on Taiwanese exports, export orders rose 15.54 percent year-on-year to a record US$345.81 billion last year. Last month alone, exports rose 17.56 percent from a year earlier to US$31.02 billion, statistics released by the Ministry of Economic Affairs showed last week.
Given the brisk external demand for Taiwanese goods, people could wonder whether this strong performance is proof of resilience in the face of strong headwinds and a looming US recession.
Some have faith that rising demand from Asia could help Taiwan buffer its weakening sales to the US. The latest ministry data showed that Asian economies, especially Hong Kong and China, have emerged to become the biggest destinations of Taiwanese exports.
Last year, about US$91.42 billion in export orders went to Hong Kong and China, surpassing those to the US at US$84.53 billion, while total orders to Asia increased 18.71 percent from the previous year to US$178.57 billion last year.
But aggravating overseas financial turmoil and inflationary pressures worldwide are threatening to drag down global economic growth and therefore slow the demand for Taiwanese products.
The size of export orders has actually been on the decline for the past three months, with US$32.2 billion in October, US$31.89 billion in November and US$31.02 billion last month. It is not clear, however, if that decline was the result of seasonal factors or was triggered by the slowdown in the US.
Last week, UBS cut its forecast for global economic growth and predicted the US economy would slide into recession in the first half of this year. It said the slowdown would hurt Asia's export-dependent economies and named Taiwan, South Korea and most Southeast Asian economies among those that would be the hardest hit.
Citigroup last week also lowered its estimate for Asia's economic growth this year and predicted that Hong Kong, Singapore, South Korea and China would likely be the hardest hit economies in the region.
Standard Chartered Bank, meanwhile, cut its economic projection for Taiwan to as low as 2.7 percent this year because of concerns over slowing exports, and Goldman Sachs also reduced its forecast for Taiwan to 3.8 percent. It said Taiwan was the most vulnerable economy in the region because of increasing downside risk in the US high-tech markets.
No one knows exactly how a slowing US economy would affect customer spending there and to what extent a slowdown would drag down the world economy. But a global downturn is inevitable and no one is immune, not even China or India.
The situation can also become worse if the US government's US$150 billion economic stimulus package fails to kickstart the sagging US economy or the US Federal Reserve's emergency interest rate cuts last week fail to revive its economy. The US problem, as suggested by billionaire George Soros in an article published last week, is actually associated with a systemic problem -- an exploding credit expansion without regulatory checks.
The downside risk is greater and may have come earlier than expected. Taiwan's export sector will face more challenges this year as the economies in Europe have already started cooling down.
Several computer and electronics makers will begin this week to report their fourth-quarter earnings and their prospects for the coming months. The government is also scheduled today to release its monthly index of leading economic indicators, a key measure of the economy's direction over the next three to six months. Both private and public sectors should consider some countermeasures in the event of the looming US recession or global downturn.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of