The nation’s economy could rebound over the next few quarters, in line with an expected turnaround for Asian countries, Taiwan Ratings Corp (中華信評) said yesterday.
The Taipei-based institute, which is the local subsidiary of S&P Global Ratings, announced its observation after S&P cut its forecast for Taiwan’s GDP growth this year from 1.5 percent to 0.5 percent.
“Both tech and non-tech companies took a hard hit to their businesses from destocking across supply chains,” corporate credit analyst Raymond Hsu (許智清) said.
Photo: Sam Yeh, AFP
External demand might improve despite lingering downside risks, Hsu said.
New artificial intelligence (AI) applications also would stimulate demand for Taiwan-made electronics, although the benefit would be limited this year and grow more evident next year and beyond, he said.
“AI servers account for a small part of revenue at local suppliers,” he said.
Share prices in related firms have more than doubled in the past few months, prompting some stock analysts to voice bubble concerns.
As exports remain an important driver for Taiwan’s economy, slow global economic growth could limit the pace of recovery, Hsu said.
Taiwan Ratings said that demand in the US and Europe could remain weak throughout this year.
However, restocking demand is around the corner and could lift Taiwan’s exports, it said, adding that technology giants are about to release new products, benefiting local firms in their supply chains.
The diversification of manufacturing away from China could also support Taiwan’s export growth amid a technology standoff between the US and China, Taiwan Ratings said.
Meanwhile, private consumption could remain healthy after the government ditched COVID-19 restrictions last year, allowing normal consumption and discretionary spending, it said.
Private investment would tell a different story, as macroeconomic uncertainties would continue to weigh on corporate capital expenditure over the next few quarters, it said, citing the restructuring of the global supply chain, inflationary pressure, geopolitical tensions and tightening monetary policies.
Against that backdrop, Taiwan could squeeze out moderate growth over the next few quarters and achieve GDP growth of 0.5 percent for this year, it said.
Downside risks facing Taiwanese companies include a hard landing for the global economy, as major central banks press ahead with monetary tightening to fight inflation, Hsu said, adding that interest rate hikes would depress demand and exports.
Further, China’s economic recovery has disappointed thus far, which is unfavorable for Taiwan in light of its heavy reliance on the Chinese market, he said.
At the same time, inflation has not subsided enough and might come back, increasing cost pressures on borrowers, he added.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
SUBSIDIES: The nominee for commerce secretary indicated the Trump administration wants to put its stamp on the plan, but not unravel it entirely US President Donald Trump’s pick to lead the agency in charge of a US$52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電). “I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding CHIPS and Science Act awards in a confirmation hearing on Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get
RSS