Soaring energy and food prices will help increase the Asia-Pacific inflation rate to a forecast 3.6 percent this year from 2.7 percent last year, a regional think tank said yesterday.
At the same time, growth is tipped to slow to 3.7 percent from 4.9 percent last year, the Pacific Economic Cooperation Council (PECC) said.
It said inflation is the biggest worry for the region at a time of slowing growth in the US, the world’s largest economy and a major market for the region’s export-reliant economies.
“While the slowdown in growth weighs heavily on policymakers’ minds, it is the specter of inflation that is causing the biggest headaches,” PECC said in its most recent outlook for the region.
“Combined together, there is very little room for monetary stimuli,” it said in the forecast for 16 Asia-Pacific economies including the US, Japan and China.
Consumers are paying more for food and gasoline throughout the region, it said.
The pain is particularly acute in Indonesia and China, the report said. Inflation in Indonesia is projected at 11.7 percent this year, nearly twice that of 6.6 percent last year, while in China it is seen at 6 percent compared with 4.8 percent last year, it said.
For Southeast Asia as a whole, overall inflation this year is projected at 6.2 percent, up from 3.2 percent last year, PECC said.
“Even with appreciating currencies, Asia-Pacific economies are starting to feel the pinch of higher energy and commodity prices,” said Yuen Pau Woo, coordinator of the PECC report.
“The recent spike in food prices has not helped. Indeed, it has exacerbated the adverse impact on vulnerable groups who spend a high proportion of their incomes on rice and other staples,” he said.
The slowing US economy, which some economists say is already in a recession, is the key reason behind the downward growth revisions for the Asia-Pacific region, PECC said.
Most of Asia is expected to feel the impact of the US slowdown, with China’s economic growth seen weakening to 9.6 percent this year from 11.4 percent last year. In Japan, this year’s growth is projected at 1.6 percent from 2.1 percent last year, PECC said.
Real GDP growth in the US is tipped to slow to 1 percent this year from 2.2 percent, but is expected to bounce back next year with expansion of 2.5 percent, the report said.
“The revision to our forecast comes from increased pessimism about the health of the US economy, which is forecast to grow at only 1 percent this year,” the report said.
“The knock-on effects of the slowdown in the US economy and the turmoil in financial markets are seen in downward revisions for growth in most Asia-Pacific economies,” it said.
PECC is a partnership of business, government and academics serving as a regional forum for cooperation and policy coordination.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
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
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
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
RSS