Closer economic ties with China will neither boost Taiwan’s consumer confidence, nor increase domestic consumption to bolster the local economy, UBS Investment Research said in a report yesterday.
“We don’t think that tense cross-strait relations caused consumer confidence to fall and led to weaker consumption,” said the report, authored by the investment banker’s chief economist Sean Yokota.
“The main reason for weak consumption is lack of income growth and households repairing their balance sheets, rather than a confidence issue,” Yokota said.
UBS expects the nation’s consumption to remain weak in the next three quarters from a combination of low income growth, the deleveraging process that has dampened consumption since the credit card crisis in late 2005 and high interest rates.
The report said a recovery could follow in the second half of next year on the return of global demand and likely central bank interest-rate cuts.
The government’s infrastructure budgets will also be factored in next year to boost the local economy while consumers’ balance sheets will be in better health to boost spending, the report said.
UBS said that it believed domestic consumption was the main driver behind the nation’s economic growth.
Since 2000, consumption has generated 60 percent of the local economy, which used to see an average 7.8 percent growth annually in the 90s, but has fallen to only 2.6 percent after 2000, despite consumers spending a bigger share of their incomes and using less for savings and tax payments, the report said.
After the profitability of the manufacturing sector started slowing in the late 1990s, the nation’s real income has averaged just a 0.7 percent year-on-year growth, down from the 4 percent average in the 90s.
In terms of monetary policy, Yokota estimated that the central bank would hike the interest rate by another 12.5 basis points this month to keep inflation pressures and capital outflows in check.
“I think the central bank sees prolonged inflation eating away consumer's purchasing power as a bigger problem than a mere 12.5 basis points hike now,” he said in an email.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”