Citibank Taiwan Ltd (台灣花旗) yesterday trimmed its GDP forecast for Taiwan to a contraction of 4.4 percent this year from a previous estimate of a 3.2 percent contraction on worse-than-expected exports in the first half of this year.
“The nation’s exports in the second quarter haven’t recovered as strongly as we had expected, which is the main reason behind our latest GDP forecast cut,” chief economist Cheng Cheng-mount (鄭貞茂) told a media briefing yesterday.
The economist said he had factored purchases by Chinese buyers, worth about US$2 billion, in the nation’s second-quarter exports, which will provide a limited lift to the nation’s export value, estimated at US$17 billion in June.
The bank in February cut its GDP forecast for this year from a minor 0.67 percent contraction to a 3.2 percent contraction after exports experienced an unprecedented 40 percent decline in the first quarter.
“We’ve just come out of the worst of the bottom and are now at the beginning of a slow U-shaped recovery,” Cheng said.
Still, Citi was relatively optimistic about the local economy for the second half of this year.
Cheng said exports should improve in the third quarter of this year, although year-on-year growth would not be possible because of a higher base at the same period last year, before picking up to average at US$20 billion per month in the fourth quarter of this year.
He forecast the nation’s exports would see a quarter-on-quarter growth of 12.5 percent in the third quarter and 2.9 percent in the fourth quarter.
The anticipated recovery, however, would be gradual, as world demand and domestic consumption remain weak.
“Not until recovery is seen in global markets will domestic consumption rise,” Cheng said, urging the government to use additional stimulus measures similar to the consumer voucher scheme launched earlier this year.
Unless global markets recover, the nation’s private investment will remain weak, which results from the nation’s deteriorating employment situation, he said, adding that Taiwan’s unemployment rate would average at 5.7 percent this year.
With inflation at a record low, Cheng said he did not expect central banks in export-oriented Asian economies — including Taiwan’s — to tighten credit by raising interest rates any time before the middle of next year.
Standard Chartered Bank chief economist Tony Phoo (符銘財) said on Tuesday he expected the central bank to keep its key interest rate at 1.25 percent.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to