The Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday raised its forecast for GDP growth this year from 3.1 percent to 4.4 percent on the back of strong exports, but said that the showing would not be exceptional globally, giving the New Taiwan dollar little room to increase further against the US dollar.
Taiwan’s tech firms have gained importance in global electronics supply chains amid US-China trade tensions and the COVID-19 pandemic, making them major beneficiaries of the remote work and learning trends, as well as enhanced safety stock levels, Yuanta-Polaris president Liang Kuo-yuan (梁國源) said.
The phenomenon, referred to as the bullwhip effect, helps account for the unprecedented prosperity local electronics makers experienced last year and this year, Liang said.
Photo: Wu Chia-ying, Taipei Times
Exports might grow 5.16 percent this year, up from the previous forecast of 5 percent, while imports might increase 3.97 percent, down from 4.07 percent, the Taipei-based think tank forecast.
Private investment could expand 4.07 percent, while consumer spending might grow 3.73 percent, it said.
With projected GDP growth of 4.4 percent, Taiwan would rank somewhere in the middle worldwide, behind major economies such as the US and China, explaining why the NT dollar has lost some momentum against the greenback, it said.
“Global capital has ... flowed to the US market to pursue better investment opportunities,” Liang said.
Yuanta-Polaris expects the NT dollar to trade at an average of NT$28.5 this year versus the greenback. The local currency closed at NT$28.538 against the US dollar in Taipei trading yesterday.
Taiwan’s robust exports would continue to bolster its current account surpluses and countries with strong trade surpluses are unlikely to have a weak currency, Liang said.
The central bank would refrain from intervention next quarter, when the US is due to update its currency report after placing Taiwan on its watch list for currency manipulation in December last year, he said.
Taiwan meets two of the three criteria by having a trade surplus with the US of US$20 billion or more and a current account surplus in excess of 2 percent of GDP, but it can contest the criterion regarding one-sided intervention in the foreign exchange market, he said.
“Taiwan had better shake off currency manipulation charges or it might attract punitive measures from the US, the world’s largest economy,” Liang said.
While the pandemic poses the biggest uncertainty to the global economy, Taiwan should strive to solve water, land, electricity, labor and talent shortages that went unnoticed until the water shortage worsened, he said.
The government should learn from major tech firms in recycling wastewater or the problem could thwart the nation’s industrial development, he added.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
MARKET LEADERSHIP: Investors are flocking to Nvidia, drawn by the company’s long-term fundamntals, dominant position in the AI sector, and pricing and margin power Two years after Nvidia Corp made history by becoming the first chipmaker to achieve a US$1 trillion market capitalization, an even more remarkable milestone is within its grasp: becoming the first company to reach US$4 trillion. After the emergence of China’s DeepSeek (深度求索) sent the stock plunging earlier this year and stoked concerns that outlays on artificial intelligence (AI) infrastructure were set to slow, Nvidia shares have rallied back to a record. The company’s biggest customers remain full steam ahead on spending, much of which is flowing to its computing systems. Microsoft Corp, Meta Platforms Inc, Amazon.com Inc and Alphabet Inc are
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
The US overtaking China as Taiwan’s top export destination could boost industrial development and wage growth, given the US is a high-income economy, an economist said yesterday. However, Taiwan still needs to diversify its export markets due to the unpredictability of US President Donald Trump’s administration, said Chiou Jiunn-rong (邱俊榮), an economics professor at National Central University. Taiwan’s exports soared to a record US$51.74 billion last month, driven by strong demand for artificial intelligence (AI) products and continued orders, with information and communication technology (ICT) and audio/video products leading all sectors. The US reclaimed its position as Taiwan’s top export market, accounting for
RSS