Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) yesterday forecast that the economy would grow 3.3 percent next year, following an expansion of 1.8 percent this year.
The projection was conservative compared with the government’s estimate and those predicted by other forecasters, as Standard Chartered is concerned about delayed COVID-19 vaccine distribution and slow private investment, it said.
The nation’s economy is likely to be affected by the slow recovery of the global economy next year, which would affect local tourism and exports of non-technology products, the bank added.
Photo: Lee Ching-hui, Taipei Times
The Directorate-General of Budget, Accounting and Statistics (DGBAS) last month forecast Taiwan’s GDP would rise 3.83 percent next year, while DBS Bank Ltd issued a 4.2 percent expansion forecast.
Meanwhile, most research agencies expect the vaccine distribution to begin worldwide in the second quarter next year and accelerate economic recovery.
However, Standard Chartered is skeptical about quick vaccine deliveries due to production challenges, and allocation and logistics issues, Tony Phoo (符銘財), a Taipei-based economist at the bank, told a news conference in Taipei.
“It remains uncertain how many COVID-19 vaccine doses can be produced next year,” Phoo said. “We assume that 1 billion doses would be produced annually, and it would take at least seven years to reach a high global immunization coverage.”
Assuming that herd immunity would be reached when at least 30 percent of the global population are vaccinated, it would still take a while to see the effect, Phoo said.
“We are facing a demand issue, not supply issues. Only when people feel safe and resume their consumption, the global economy will return to the pre-pandemic level,” he said.
The bank forecast that the nation’s private investment, mostly in the technology sector, would likely slow down next year, Phoo said, citing that imports of semiconductor equipment, a leading indicator of investment in the technology sector, declined 17 percent annually last month.
The prediction came in contrast to the DGBAS’ forecast that private investment would increase by a healthy 3.19 percent next year.
Besides the slowing imports of equipment, the high comparison base would also make it difficult for private investment to stage a strong rally next year, Phoo said.
The bank expects Taiwan’s private consumption to rebound next year, particularly in the second quarter, as the labor market would remain stable, he said.
The central bank would leave the benchmark interest rates unchanged next year, Phoo said, as global economic growth would remain weak and Taiwan’s headline inflation would rise modestly, at less than 1 percent.
The US-China trade tensions would be another potential risk for Taiwan’s economy, Phoo said.
The tensions are not expected to improve or deteriorate anytime soon, he added.
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
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS