Coface, an international credit insurance and credit management services group, yesterday downgraded its ratings for 22 countries and territories, including Hong Kong and Taiwan, while putting the two biggest emerging markets — China and Russia — on its negative watch list for the first time.
After a strong 5.7 percent growth in 2007 and 6.3 percent growth in the first quarter of last year, Taiwan’s economy slowed markedly for the rest of the year, Coface said in a statement.
The slowdown was mainly attributable to a weakening of overseas demand, particularly in China, Hong Kong and above all, the US — Taiwan’s main trading partner as it is the ultimate re-export destination for about 70 percent of the nation’s shipments to China, it said.
Given tight credit and dim sales prospects, companies have delayed investments, Coface said, adding that this raised risks that the Taiwanese economy could contract this year.
The country, having been placed on the negative watch list in December 2006, has been downgraded to “A2,” the statement said.
The subprime-triggered credit crisis took on a new dimension in the last quarter, when businesses in countries that had managed to hold out were also affected, said Richard Burton, Coface’s regional managing director for Greater China.
With a latest global GDP forecast of 0.9 percent this year, the estimated fall in GDP from 2007 to this year will be 3.1 percentage points, which would exceed the 2.5 percentage points seen during the previous credit crisis between 2000 and 2001.
“The sharp slowdown explains the rise of 47 percent in the Coface payment incident index between 2007 and 2008, and we forecast that the credit crisis will only end as this year comes to a close,” Burton said.
“Amid a shrinking credit supply, growth in corporate investments has slowed,” Burton said. “The growth slowdown is expected to continue in the first half of 2009 and the economy could even slip into recession [if it is not already there]. Expansionary monetary and fiscal policies may pave the way for a slight recovery in the second half of the year.”
After peaking in 2007 with 11.9 percent growth, the Chinese economy cooled last year following slowdowns in exports and domestic demand. Aside from exports suffering from sagging demand from industrialized countries, Coface said, there was less dynamism in investment and consumption.
To ensure sustained economic growth, which Coface said could reach 7 percent this year, China has unveiled a 4 trillion yuan (US$585 billion) fiscal stimulus package. Coface warned this could cause a significant upsurge in payment defaults.
“According to Coface’s records, payment performance in Hong Kong, Taiwan and China has been deteriorating and is likely to worsen this year as the economic slowdown tightens its grip,” Burton said. “Companies should be more careful than ever in tracking their buyers’ payment behavior.”
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
‘DRAMATIC AND POSITIVE’: AI growth would be better than it previously forecast and would stay robust even if the Chinese market became inaccessible for customers, it said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its full-year revenue growth outlook after posting record profit for last quarter, despite growing market concern about an artificial intelligence (AI) bubble. The company said it expects revenue to expand about 35 percent year-on-year, driven mainly by faster-than-expected demand for leading-edge chips for AI applications. The world’s biggest contract chipmaker in July projected that revenue this year would expand about 30 percent in US dollar terms. The company also slightly hiked its capital expenditure for this year to US$40 billion to US$42 billion, compared with US$38 billion to US$42 billion it set previously. “AI demand actually
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS