Fitch Ratings yesterday retained its negative outlook on Taiwan’s AA long-term local currency rating on lingering concerns over the nation’s deteriorating fiscal condition and weaker economic recovery compared with other emerging economies in the region.
The UK-based agency early last year lowered its outlook rating on Taiwan to negative from stable, in view of the nation’s increasing public debt and declining tax revenue after the government adopted measures to mitigate the effects of the global financial crisis.
“We retain the rating on Taiwan because of its weak fiscal outlook,” Vincent Ho (何永燊), associate director on Fitch’s Asia-Pacific sovereign ratings team, told a conference in Taipei.
The government’s debt is rising while tax revenue is shrinking and fiscal consolidation in the medium term may not be credible, Ho said.
To stimulate the economy, Taiwan has since January last year cut inheritance tax to a flat 10 percent from a range of 2 percent to 50 percent and recently lowered corporate income tax from 25 percent to 17 percent.
Meanwhile, the government has raised debt to finance infrastructure expansion and assorted welfare programs for the disadvantaged and the unemployed.
Taiwan’s public debt is approaching its legal limit, as government expenditure remains high, while tax revenues have shown little improvement since emerging from global recession, Ho said.
The analyst expects the nation’s economy to expand by 7.9 percent this year, from a contraction of 1.9 percent last year, but noted that its five-year average performance hovers slightly above 3 percent, slower than emerging Asia’s median of more than 5.5 percent.
Fitch also retained its “A+” stable outlook on Taiwan’s foreign currency rating on strong external finances attributing to robust exports, the report showed.
The current-account surplus continues to boost the nation’s foreign-exchange reserve accumulation, which has reached more than 130 percent of GDP, the report said.
However, Ho voiced concern that high unemployment in the US and Europe may weaken demand for Taiwanese electronics, casting uncertainty on the nation’s economic prospects.
“While a global double-dip is unlikely, risks remain because Fitch hasn’t bought into Asian decoupling yet,” Ho said, referring to the argument that Asia has become independent from the West in shoring up its economy.
Sweeping policy changes under US Secretary of Health and Human Services Robert F. Kennedy Jr are having a chilling effect on vaccine makers as anti-vaccine rhetoric has turned into concrete changes in inoculation schedules and recommendations, investors and executives said. The administration of US President Donald Trump has in the past year upended vaccine recommendations, with the country last month ending its longstanding guidance that all children receive inoculations against flu, hepatitis A and other diseases. The unprecedented changes have led to diminished vaccine usage, hurt the investment case for some biotechs, and created a drag that would likely dent revenues and
Global semiconductor stocks advanced yesterday, as comments by Nvidia Corp chief executive officer Jensen Huang (黃仁勳) at Davos, Switzerland, helped reinforce investor enthusiasm for artificial intelligence (AI). Samsung Electronics Co gained as much as 5 percent to an all-time high, helping drive South Korea’s benchmark KOSPI above 5,000 for the first time. That came after the Philadelphia Semiconductor Index rose more than 3 percent to a fresh record on Wednesday, with a boost from Nvidia. The gains came amid broad risk-on trade after US President Donald Trump withdrew his threat of tariffs on some European nations over backing for Greenland. Huang further
Macronix International Co (旺宏), the world’s biggest NOR flash memory supplier, yesterday said it would spend NT$22 billion (US$699.1 million) on capacity expansion this year to increase its production of mid-to-low-density memory chips as the world’s major memorychip suppliers are phasing out the market. The company said its planned capital expenditures are about 11 times higher than the NT$1.8 billion it spent on new facilities and equipment last year. A majority of this year’s outlay would be allocated to step up capacity of multi-level cell (MLC) NAND flash memory chips, which are used in embedded multimedia cards (eMMC), a managed
CULPRITS: Factors that affected the slip included falling global crude oil prices, wait-and-see consumer attitudes due to US tariffs and a different Lunar New Year holiday schedule Taiwan’s retail sales ended a nine-year growth streak last year, slipping 0.2 percent from a year earlier as uncertainty over US tariff policies affected demand for durable goods, data released on Friday by the Ministry of Economic Affairs showed. Last year’s retail sales totaled NT$4.84 trillion (US$153.27 billion), down about NT$9.5 billion, or 0.2 percent, from 2024. Despite the decline, the figure was still the second-highest annual sales total on record. Ministry statistics department deputy head Chen Yu-fang (陳玉芳) said sales of cars, motorcycles and related products, which accounted for 17.4 percent of total retail rales last year, fell NT$68.1 billion, or
RSS