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.
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
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
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],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts