The government recently said it would improve public finances as the debt ratio is approaching the legal ceiling, but Moody’s said the government should be concerned that consumer spending is being crowded out by lower welfare spending and falling tax revenues.
The Cabinet last month approved a revised central government budget for next year, including a plan to borrow a record NT$516.2 billion (US$16 billion) in loans — more than NT$455.8 billion this year — to finance its economic stimulus spending and post-Typhoon Morakot reconstruction work.
Total government debt is expected to reach NT$4.635 trillion by the end of next year and Minister of Finance Lee Sush-der (李述德) said last week the government would work to prevent the level of debt, as a percentage of GDP, from reaching the 40 percent ceiling.
The debt ratio, however, could reach 40.1 percent by the end of this year from 35.5 percent last year, the Council for Economic Planning and Development said in a statement on Sept. 29.
That is higher than a median of 32 percent in Taiwan’s Aa-rated peers and a median of 35 percent for the A-rated sovereigns, Moody’s Investors Service said.
“The legal limit of 40 percent is conservative compared to the European Union’s 60 percent limit and the debt levels of Taiwan’s neighbors,” Tine Olsen, an economist at Moody’s Economy.com based in Sydney, said in an e-mailed statement on Friday. “Instead of worrying about a legal boundary for government debt, authorities should be concerned about the effects the higher debt has on the economy.”
Despite the government’s distribution of shopping vouchers valid until Sept. 30, consumer spending in Taiwan was still restrained by the slow economy, as retail sales in the year to August contracted 1.65 percent from a year ago, data from the Ministry of Economic Affairs showed on Sept. 22.
Meanwhile, unemployment rate reached a record high of 6.13 percent last month and nominal wages dropped 6.72 percent to NT$39,872 in July from a year ago, indicating that consumers are more inclined to increase their savings than spend money.
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