The Taiwan Research Institute (TRI, 台灣綜合研究院) warned yesterday that global economic momentum may be significantly damaged if the US decides to trim its third round of quantitative easing.
The think tank made the comments after revising downward its forecast for GDP growth this year by more than half to 2.14 percent, from the 3.57 percent it estimated in December last year.
The institute’s latest GDP forecast was the lowest among all domestic think tanks, and also lower than the 2.4 percent growth estimated by the Directorate-General of Budget, Accounting and Statistics (DGBAS) last month.
“Weaker-than-expected economic growth in the first quarter of the year, led by sluggish momentum in private consumption, was the major factor behind the downward revision,” TRI president Wu Tsai-yi (吳再益) told an economic outlook conference.
Wu said a number of global economic uncertainties could affect the nation’s economy, with the timing of the US Federal Reserve’s decision to scale back quantitative easing the most important.
However, without a solid improvement in the US unemployment rate and slowing the growing headline inflation rate in the US, recklessly trimming easing may seriously hurt the global economy, Wu said.
Domestically, other than stagnancy in real wages, Wu said the recent issue of food safety may damage private consumption, which may only expand by 1.31 percent this year.
In addition, compared with the Japanese and South Korean currencies, the New Taiwan dollar has declined less against the US dollar this year, further damping demand and affecting exports, Wu said, adding that the institute expected the nation’s export sector to grow by 4.65 percent this year.
However, private investment may grow by 6.49 percent this year as the main driver for the economy, with the semiconductor and telecom sectors expected to fuel momentum, Wu added.
On consumer prices, the institute forecast the headline inflation rate would increase by 1.33 percent this year from last year.
However, DGBAS statistics division director Tsai Hung-kun (蔡鴻坤), who was invited to join the conference, said currency depreciation was not the only nor the most important factor behind the sluggish export momentum.
“The problem of domestic industries lacking competitiveness may be more serious,” Tsai said at the conference.
However, Tsai shared the institute’s view on private consumption, saying that public concern over food safety may impact demand on the food industry, which has sales of about NT$400 billion (US$13.35 billion) a year.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is