The manufacturing sector’s production value is forecast to rise 5.49 percent year-on-year to NT$23.38 trillion (US$723.48 billion) next year, mainly driven by demand for emerging technology applications, the Industrial Technology Research Institute’s Industry, Science and Technology International Strategy Center (ISTI) said in a report yesterday.
The sector has shown signs of a recovery lately, the report said, citing factors such as consecutive months of increases in the manufacturing purchasing managers’ index of major economies and the gradual pickup of global trade volume, while inventory levels among Taiwanese manufacturers are returning to normal levels.
Despite the report, the center said it expects the sector’s production value to contract 10.68 percent to NT$22.17 trillion this year, as the output of four major industries drop by between 1.73 and 13.74 percent from last year after major central banks raised interest rates to curb inflation and dented market demand.
Photo courtesy of the Industrial Technology Research Institute
The four major pillars of the sector refer to the information and electronics industry, the chemical industry, the metals and machinery industry, and the livelihood industry — which includes textile and food production.
“With external demand improving, domestic investment turning positive and private consumption stabilizing, the outlook for Taiwan’s economic growth next year is positive, and the manufacturing sector would regain growth momentum,” ISTI analyst Chen Chia-ying (陳佳楹) said in the report.
However, geopolitical tensions, increasing economic polarization, China’s property market woes and commodity price fluctuations would pose risks to the global economy next year, which would in turn affect Taiwan’s export-oriented manufacturers, Chen said.
“There are also three major trend changes that warrant closer attention, including supply chain restructuring, accelerated technological innovations and advances in semiconductor technologies,” she said.
The report forecast a 7.57 percent annual increase in the production value of the information and electronics industry next year, as inventory adjustments are nearing an end and innovative applications such as 5G, automotive devices and low Earth orbit satellites continue to emerge.
It predicted a 4.07 percent growth in the output of the chemical industry next year, saying the steady demand for low-carbon, sustainable products would lead to a transformation in the industry.
Production value in the metals and machinery industry is forecast to increase 3.93 percent next year on the back of semiconductor companies’ global deployment, business opportunities related to green and smart manufacturing and demand from emerging markets, the report said.
The livelihood industry is expected to expand output 3.97 percent from this year, thanks to the easing pressure on food and raw material prices and less stressful inventory adjustments in the international market, it said, adding that textile makers are to see strong growth momentum next year due to the Summer Olympics Games in Paris.
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