The government’s business climate monitor turned “red” for December last year, suggesting an economic boom after a three-month hiatus, attributable to strong demand for electronics used in developing artificial intelligence (AI), the National Development Council (NDC) said yesterday.
The composite score rose 4 points from November last year to 38, helped by the high sales season for technology products and frontloading demand ahead of the Lunar New Year holiday, NDC Economic Department Director Chiu Chiu-ying (邱秋瑩) told a media briefing, adding that pickups in the industrial output, manufacturing sales and business confidence readings contributed to the gain.
The council uses a five-color system to depict the nation’s economic state, with “red” indicating a boom, “green” suggesting steady growth and “blue” signaling a recession. Dual colors of “yellow-red” and “yellow-blue” indicate that the economy is changing gears.
Photo: CNA
Taiwan is home to the world’s major suppliers of AI chips, servers, memory, storage and other electronic components.
Domestically, retailers and restaurants reported resilient business in line with Lunar New Year celebrations, the council said.
The index of leading indicators, which seeks to project the economic scenes in the subsequent six months, shrank 0.76 percent to 100.43, with most components — including stock prices, new construction floor space, exports outlook and money supply — losing momentum, the council said.
The readings for labor accession and imports of semiconductor equipment displayed positive cyclical movements, it added.
AI-related sectors might be overheating, warranting careful monitoring, Chiu said, adding that US President Donald Trump’s trade policy is adding to the uncertainty.
Trump has threatened to impose tariffs on semiconductors, which would be unfavorable for Taiwan’s chipmakers.
The index of coincident indicators increased 0.61 percent to 105.2 thanks to favorable cyclical movements in industrial production, imports of capital equipment, exports and overtime hours, the council said.
The advances more than offset retreats in the measures of electricity usage, as well as wholesale, retail and restaurant revenues, it said.
The council said it is confident that Taiwan’s economy would grow by more than 3 percent this year, on top of a 4.3 percent increase last year.
Chiu declined to comment on whether the “red” signal would continue, saying that “red” and “yellow-red” signals both indicate economic health.
Global trade is to rise this year, while major US technology giants have reaffirmed commitment to AI investments, a trend that would benefit local firms on the AI supply chain, she said.
Furthermore, companies at home and abroad would step up spending on low carbon migration, which would help boost private investment, she added.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of
RSS