Taiwan’s economy would come out of the woods this quarter and grow 1.5 percent for the whole year, as technology inventory adjustments come to an end, National Development Council Minister Kung Ming-hsin (龔明鑫) said yesterday.
Kung was speaking at a meeting of the legislature’s Economics Committee, as lawmakers voiced concern over the nation’s economic health amid escalating geopolitical tensions.
“Exports have shown a gradual, but steady improvement and recorded positive growth in September following a year-long decline,” he said.
Photo: Tu Chien-jung, Taipei Times
Kung said he was confident the council’s business climate monitor would shake off the “blue” label this quarter. A blue signal indicates a recessionary state.
Inventory adjustments have largely faded away, allowing exports last month to increase following a 12-month contraction, the minister said.
Recovery usually begins with the end market and then extends to firms on the upstream of the supply chain, namely vendors of electronic components, he said.
Taiwan is home to the world’s major suppliers of electronics used in smartphones, personal computers, vehicles and graphics processing unit (GPU) modules used in servers for generative artificial intelligence (AI) applications.
Strong demand for AI-related applications accounted for the turnaround in exports in light of a 60 percent surge in shipments of information and communication technology products, the Ministry of Finance said last week.
Non-tech sectors — such as manufacturers of metal products and machinery equipment — have to wait a bit longer even though their business retreat has eased, the minister said.
Asked about the impact of the Israel-Hamas war, Kung said that it depends on whether the military conflict would involve oil-exporting countries and send crude oil prices higher.
“Taiwan would remain unscathed, if international oil prices remain stable... Unfavorable factors would heighten otherwise,” he said.
Domestically, service providers should continue to see robust business given a healthy job market, retail sales and restaurant revenues, he said.
As for China possibly scrapping the Economic Cooperation Framework Agreement, Taiwanese firms would still be able to sell goods to China, but would have to pay higher tariffs, estimated at US$800 million, he said.
China last week announced it has extended an investigation into import restrictions imposed by Taiwan on more than 2,400 Chinese products to Jan. 12 next year, the day before Taiwan’s presidential and legislative elections.
Beijing’s probe, initiated in April and supposed to be wrapped up last week, targets import restrictions Taiwan has imposed on 2,455 product types from the agricultural, textile and mineral sectors in China.
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