The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday cut its forecast for the nation’s GDP growth this year by 0.27 percentage points to 2.31 percent, as exports and private investment fare weaker than expected amid a global economic slowdown.
The projection made the Taipei-based think tank the most optimistic among local research bodies as it believes the domestic front would hold firm with support from the government.
Exports, the key growth driver that accounts for about 60 percent of GDP, shrank by double-percentage points in the first quarter and would not come out of the woods until the fourth quarter, meriting a downward growth revision, TIER Economic Forecasting Center director Gordon Sun (孫明德) told an online news conference.
Photo: CNA
Exports would contract 7.08 percent this year, while imports would decline 9.18 percent, Sun said.
The institute previously forecast that outbound and inbound shipments would advance.
The pain induced by major central banks’ drastic interest rate hikes would grow more evident this year, sapping global demand for goods and services, he said.
Taiwanese exporters, especially electronics suppliers, have been hit hard, with many reporting disappointing first-quarter results, Sun said, adding that a meaningful recovery hinges on inventory adjustments, which would take longer than expected.
The backdrop is unfavorable for fixed capital formation and private investment, with the former forecast to squeeze in a tiny 0.42 percent growth while the latter would fall 0.32 percent, as businesses turn cautious about capital spending, the institute said.
The government and public enterprises would lend support by increasing their investment and expenditure to bolster overall domestic demand, Sun said.
The institute is sticking to its forecast growth of 5.95 percent for private consumption, the mainstay of GDP growth this year, Sun said.
TIER is less pessimistic compared with other institutes, because it has tracked business confidence for different sectors and discerned a sentiment pickup for several straight months.
The sentiment gauge for the manufacturing industry last month gained 2.24 points for the fifth month to 93.95, although companies with positive views decreased to 26.1 percent and more companies turned conservative, it said.
The confidence reading for service providers rose 1.52 points to 96.75, the strongest since August last year, it said.
Interest rate hikes have benefited the wealth management business and credit card charges received a boost from rising overseas travel, it said.
The sentiment value for construction companies and real-estate brokers dropped 2.02 points to 91.25, as pricing differences continued to slow transactions, it 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