The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday cut its forecast for GDP growth this year to 2.01 percent from 2.72 percent it predicted in December last year, saying that global inflation, monetary tightening and geopolitical tensions would sap exports and leave it to private consumption to sustain the economy.
The downward revision was largely due to unfavorable external factors, such as the Ukraine war and inflation remaining above central bank targets in advanced economies, CIER president Yeh Chun-hsien (葉俊顯) said.
In addition, the US-China technology competition weighs on outbound shipments, as major Taiwanese electronics suppliers have large manufacturing facilities in China, Yeh said.
Photo: Taipei Times
Against that backdrop, exports, the main driver of GDP growth in Taiwan, are expected to contract 9.52 percent this year, while imports would shrink 9.49 percent, a stark contrast from last year’s solid gains of 7.41 percent and 12.06 percent respectively, the Taipei-based think tank said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that inventory adjustments would affect it more and longer than expected, adding that end-market demand would remain weak for smartphones and personal computers next quarter.
The guidance was more conservative than three months earlier, when the Hsinchu-based company said that effects of inventory adjustments would end in the first half of the year.
Yeh said GDP growth would likely remain above 2 percent, as exports are expected to regain traction in the fourth quarter, consistent with TSMC chief executive officer C.C. Wei’s (魏哲家) remark that the company’s inventory would return to healthy levels in the final quarter.
CIER predicted a GDP contraction of 0.89 percent for last quarter and mild recovery in the quarter ahead.
Private consumption would emerge further from a COVID-19 slump, expanding 4.64 percent this year and contributing 2.08 percentage points to GDP growth, it said.
Consumer prices would increase 2.18 percent, higher than the central bank’s 2 percent target, driven by more expensive food, services and rents, it said.
Academia Sinica research fellow Ray Chou (周雨田) said Taiwan’s consumer price increases have been above the target for 21 straight months, indicating that inflationary pressures are not transient in nature.
The government might raise electricity prices a second time this year to keep unprofitable state-run Taiwan Power Co (台電) afloat, after an 11 percent increase this month, Chou said.
The jobless rate is to remain steady at 3.62 percent, while the New Taiwan dollar would trade at an average of NT$30.45 against the US dollar, CIER said.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his