The worst of the financial sector crisis is over although the impact on the broader economy will likely drag on in coming months, IMF managing director Dominique Strauss-Kahn said yesterday.
“There are good reasons to believe that the largest part of disclosure in financial institutions has been done, especially in the United States ... so that the worst news is behind us,” he told a panel at the European Parliament.
“The main problem is the linkages between the financial crisis and the real economy and this is not behind us,” he added, estimating the impact of the financial turmoil to weigh on economic activity for another “several quarters.”
Economic growth has lost pace in most major economies recently in the wake of a slump in the US housing market, which has triggered extreme financial market volatility and reluctance among banks to make all but the safest loans.
After months of nerve-wracking swings in financial markets, optimism has begun to emerge among market participants that the worst of the storm has blown over since the collapse of the US investment bank Bear Stearns in the middle of March.
While past financial crises tended to be triggered by problems in developing countries, often with current account problems, Strauss-Kahn warned that in the long term the recent turmoil would likely be “a taste of the new kind of crisis that we are going to face.”
With big developed economies such as the US and Europe slowing following the turmoil, Strauss-Kahn said that emerging countries would be the biggest motors behind world economic growth this year.
Nevertheless, he insisted that such fast-growing economies would also eventually feel the impact of the slowdown in rich countries, although perhaps with “some delay.”
“In no way is there some sort decoupling” between economic growth trends in developed countries and emerging economies, he said, weighing into one of the hottest debates currently in economics.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
RSS