Elections in several Asian countries this year pose varying degrees of economic risks that are expected to defer many big investment plans until after the polls, German lender Deutsche Bank said.
India, Indonesia, Malaysia, the Philippines, South Korea and Taiwan are scheduled to hold presidential and parliamentary elections this year, the results of which could result in important policy changes.
This could disrupt the bank's otherwise rosy 7.2 percent growth forecast for the Asian region outside Japan, which should be powered by strong export growth and a pick-up in domestic demand.
"In our view, the biggest risk to domestic demand growth in the region stems from the unusually high degree of political risk," the bank said in a report released here.
"A climate of political uncertainty such as this is unlikely to encourage investors. Instead, we expect many large-scale investment plans to be on hold until after elections are over," it said.
Deutsche Bank chief economist for Asia Michael Spencer singled out the Philippines and South Korea as the countries where the elections would most likely result in significant policy shifts that could unsettle investors.
"It is possible, probably not likely but possible, that the [elections] in [South] Korea could lead the National Assembly to a more rightward direction in terms of economic policy than the current government has been trying to pursue," he said at a seminar organized by the bank in Singapore on Friday.
South Korea is scheduled to hold parliamentary elections in April.
For the Philippines, Spencer said there was a chance the next president after the May elections would not have the same commitment to fiscal sustainability than the current government of President Gloria Arroyo.
Arroyo, an economist, is being challenged by movie actor and school dropout Fernando Poe Jr, whose lead in popularity surveys is giving jitters to business executives and investors because of his lack of political experience.
Poe's long-time close friend and disgraced former president Joseph Estrada is on trial for corruption after being deposed in an uprising in 2001.
Deutsche Bank said it expected investments to suffer in the first half of this year in South Korea and the Philippines as companies sidelined spending plans until after the polls.
The risks in Taiwan's presidential elections in March seem to be more on the polls' impacts on relations with China.
In other countries, although elections by nature add to economic uncertainty, the status quo is expected to be preserved.
While the process of choosing a president in Indonesia is complicated and drawn out, there should be no drastic shifts in policies whoever is elected, the bank said.
"Economic policy is not the issue in the election and we see broad support for the current policy framework of relatively tight fiscal policy and slightly expansionary monetary policy," it said.
Indonesia is to hold parliamentary elections in April, the first round of presidential voting in July and a second round in September.
India's ruling Hindu nationalists have suggested an early election in March ahead of the scheduled date of October.
General elections in Malaysia must be called by the year-end but there is speculation they could be called earlier.
Foreign policy issues such as North Korea's nuclear program and terrorism also pose significant political risks, the bank said.
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
SEMICONDUCTOR SERVICES: A company executive said that Taiwanese firms must think about how to participate in global supply chains and lift their competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it expects to launch its first multifunctional service center in Pingtung County in the middle of 2027, in a bid to foster a resilient high-tech facility construction ecosystem. TSMC broached the idea of creating a center two or three years ago when it started building new manufacturing capacity in the US and Japan, the company said. The center, dubbed an “ecosystem park,” would assist local manufacturing facility construction partners to upgrade their capabilities and secure more deals from other global chipmakers such as Intel Corp, Micron Technology Inc and Infineon Technologies AG, TSMC said. It
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
EXPORT GROWTH: The AI boom has shortened chip cycles to just one year, putting pressure on chipmakers to accelerate development and expand packaging capacity Developing a localized supply chain for advanced packaging equipment is critical for keeping pace with customers’ increasingly shrinking time-to-market cycles for new artificial intelligence (AI) chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday. Spurred on by the AI revolution, customers are accelerating product upgrades to nearly every year, compared with the two to three-year development cadence in the past, TSMC vice president of advanced packaging technology and service Jun He (何軍) said at a 3D IC Global Summit organized by SEMI in Taipei. These shortened cycles put heavy pressure on chipmakers, as the entire process — from chip design to mass
RSS