Taiwan’s economy has gradually rebounded from a slowdown that started in the second quarter of last year. GDP is set to grow by the fastest pace in three years, but over-reliance on the technology sector, a talent shortage and imbalanced power generation development might limit continued economic expansion in the coming years, Pegatron Corp chairman and Taipei Computer Association honorary chairman Tung Tzu-hsien (童子賢) said at a forum in Taipei on Friday last week.
Overseas shipments of Taiwan-made electronics, semiconductors, computers and communication devices accounted for 55 percent of the nation’s overall exports last year, Tung said, adding that the ratio could exceed 60 percent if shipments of precision machinery and optical equipment were included.
There is no doubt that steady development in the technology sector has enabled Taiwan to play a pivotal role in global supply chains, specifically in the semiconductor industry. It has become a major pillar of the nation’s economy, but is the growth sustainable?
With globalization, an ever-evolving landscape of geopolitics, stricter technology controls around the world and rising production costs due to demographic shifts and natural resource scarcity, Taiwanese technology firms must seek new niche markets to stay afloat, Tung said. “The nation’s industrial landscape needs to be more diverse,” he said.
Tung also mentioned challenges the nation is facing — including renewable energy intermittency and Taiwan’s geographical features. The government should be more cautious with energy policy and prepare for new technology, he said.
Taiwan has been working toward boosting its solar efficiency and has been using cleaner and more sustainable alternatives to fossil fuels, such as wind power and hydropower.
The economy this year would likely expand by 3.43 percent, compared with last year’s 1.31 percent, the largest increase since 2021, when the economy grew 6.62 percent, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).
The estimated growth is slightly higher than the average 3.26 percent from 2013 to 2022, indicating the growth momentum would likely return to normal this year. However, slow global economic recovery and uncertainty with geopolitical risks would drive firms to remain prudent in capital expenditure planning.
Private investment is expected to grow 1.45 percent this year, down 1.72 percentage points from the previous estimate and lower than the 6.76 percent average growth from 2013 to 2022, the DGBAS said.
This begs the question: Are there any other industries that would increase their investments and help stabilize Taiwan’s economy when the nation’s main industries are in bad shape?
Over the past few years, local media have often referred to the biotech industry as another “sacred mountain” protecting the country just like Taiwan Semiconductor Manufacturing Co. However, it is doubtful whether this industry is globally competitive.
Taiwan’s aging population and declining birthrate could also prompt the healthcare system to acquire more medical equipment and boost the development of biomedicine and pharmaceuticals. However, this would require massive investment and years of research and development.
Meanwhile, the information and communications technology industry has seen growth amid the artificial intelligence (AI) frenzy, with those focused on AI performing exceptionally well. It remains to be seen whether this industry will continue on its upward trend in the years to come.
Vice President William Lai (賴清德) is set to take office as president on May 20. Policies that can ease Taiwanese industries’ difficulties and help the economy grow would show that the new government truly believes in “Made in Taiwan.”
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