Economic growth is gaining momentum in the US, Europe and other advanced countries despite temporary setbacks, a leading international organization said on Tuesday.
Smaller government spending cuts and fewer tax increases this year should boost growth in most developed countries, according to the Organisation for Economic Co-operation and Development (OECD). Households and businesses are also in better financial shape and can capitalize on still-low interest rates, it said.
Yet growth will likely slow in developing countries, which now account for more than half of global growth. Countries such as India and Brazil are struggling with higher inflation and falling currencies. Investors have pulled money from those countries as the US Federal Reserve has begun to scale back its bond purchases.
The Fed’s bond buying lowered long-term US rates and sent investors into emerging markets in search of higher returns. Now that US rates may be poised to rise, some money is flowing back out, pressuring developing countries’ currencies and financial markets.
The OECD, a think tank for the world’s most developed countries, forecasts global growth of 3.6 percent this year, up from an estimated 2.7 percent last year. That is similar to estimates from other global organizations, such as the IMF.
In the advanced economies, temporary factors will likely weaken growth early this year, including harsh winter weather in the US and Canada and an impending sales tax increase in Japan, the OECD said. However, growth in most developed economies should then rebound by the second half of the year.
One sign of underlying strength is that global trade has rebounded and last fall began to grow as quickly as it did before the recession, the OECD said, “after an extended period of unusually sluggish growth.”
The organization warned that while the EU’s economy seems to be improving, “so far it is doing so later and at a slower pace than in the other major economies.”
It also warned that the dip in growth in the US over the winter could have longer-lasting repercussions.
“If the recent economic weakness were to durably depress confidence, it could undermine the recovery,” the OECD said.
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
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
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li