Bank of America Securities-Merrill Lynch expressed pessimism for Taiwan’s economy and forecast a GDP contraction of 3 percent this year at its 12th Asian Tech Conference yesterday.
For this year, the newly merged investment bank saw little in terms of aggressive fiscal policy, as well as the unlikelihood that government budget spending could deliver a promised 2 percent stimulus effect. Additionally, depreciation of the NT dollar was on the horizon as well, Timothy Bond, chief Asia economist at Bank of America Securities-Merrill Lynch Research told the audience.
“Although sustainable growth is there for Taiwan in 2010, there is still no domestic consumption,” Bond said.
The chief economist said the worst of the crisis hasn’t appeared yet on the global scene. In other words, unexpected bad news may continue to pop up everywhere, he said.
However, in the short term, Bond envisions a pick up in markets in both the US and Asia, when inventory digestion runs its course in the first two quarters of the year, and natural consumption resumes in the latter half of the year.
For China in particular, Bond has seen upstream production spikes in cement, steel, money growth and credit, which are all positive signs. He also saw inter-regional trade start to turn around in the second half of the year.
But by no means was the global economic crisis over, he said.
“In order for worldwide sustainable growth to return and in particular [in] Asia, the American and European policymakers need to get it right and developed countries need to normalize first,” he said.
Moreover, even when that happens, Asian countries need to realize that developed markets can no longer be long-term drivers of growth, he said.
Bond named three reasons why Asia has suffered minimally from this credit crisis, as Asian companies are typically under-leveraged, consumer savings are high and countries run external surpluses. These are lessons the US and Europe need to learn, he said.
For Bond, successful US and European policies include a return of increased banking liquidity, useful macroeconomic policy and re-capitalization of large, solvent financial institutions. The smaller insolvent ones should simply fade away in the war for survival, he said.
“Realistically, recovery will not happen in the US for the next three to five years, as re-balancing for US consumers has just begun,” Bond said.
The savings rate for the US is currently 3 percent, Bond sees 8 percent as the recovery benchmark and to reach that figure, “either income needs to increase by 5 percent, unlikely in the short term, or consumption needs to fall by 5 percent,” he said.
So far, he said, the most successful government support has come from China of all places, perhaps because top-down policies don’t need consensus and don’t need to run through any length of bureaucratic time line.
Although Bond averages a 1.5 percent global GDP retraction for this year, this figure is not balanced across the board as he sees the US contracting 3 percent, China growing at 8 percent and emerging markets hovering at around 3 percent.
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
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],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day