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.
TRADE WAR: Tariffs should also apply to any goods that pass through the new Beijing-funded port in Chancay, Peru, an adviser to US president-elect Donald Trump said A veteran adviser to US president-elect Donald Trump is proposing that the 60 percent tariffs that Trump vowed to impose on Chinese goods also apply to goods from any country that pass through a new port that Beijing has built in Peru. The duties should apply to goods from China or countries in South America that pass through the new deep-water port Chancay, a town 60km north of Lima, said Mauricio Claver-Carone, an adviser to the Trump transition team who served as senior director for the western hemisphere on the White House National Security Council in his first administration. “Any product going
TECH SECURITY: The deal assures that ‘some of the most sought-after technology on the planet’ returns to the US, US Secretary of Commerce Gina Raimondo said The administration of US President Joe Biden finalized its CHIPS Act incentive awards for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), marking a major milestone for a program meant to bring semiconductor production back to US soil. TSMC would get US$6.6 billion in grants as part of the contract, the US Department of Commerce said in a statement yesterday. Though the amount was disclosed earlier this year as part of a preliminary agreement, the deal is now legally binding — making it the first major CHIPS Act award to reach this stage. The chipmaker, which is also taking up to US$5 billion
High above the sparkling surface of the Athens coastline, the cranes for building the 50-floor luxury tower centerpiece of Greece’s future “smart city” look out over the Saronic Gulf. At their feet, construction machinery stirs up dust. Its backers say the 8 billion euro (US$8.43 billion) project financed by private funds is a symbol of Greece’s renaissance after the years of financial stagnation that saw investors flee the country. However, critics see it more as a future “ghetto for the rich.” It is hard to imagine that 10km from the Acropolis, a new city “three times the size of Monaco”
STRUGGLING BUSINESS: South Korea’s biggest company and semiconductor manufacturer’s buyback fuels concerns that it could be missing out on the AI boom Samsung Electronics Co plans to buy back about 10 trillion won (US$7.2 billion) of its own stock over the next year, putting in motion one of the larger shareholder return programs in its history. South Korea’s biggest company would repurchase the stock in stages over the coming 12 months, it said in a regulatory filing on Friday. As a first step, it would buy back about 3 trillion won of paper starting today up until February next year, all of which it would cancel. The board would deliberate on how best to effect the remaining 7 trillion won of buybacks. The move