The nation’s manufacturing output is forecast to grow at a slower-than-expected pace this year, affected by global economic uncertainties in the US and China, the Industrial Technology Research Institute (ITRI, 工研院) said yesterday.
The manufacturing sector’s output is estimated to rise 3.1 percent to NT$17.73 trillion (US$585.52 billion) this year, after a 2.21 percent expansion last year, ITRI researcher Peter Chen (陳志強) told a press conference.
The forecast was revised downward from an estimate of 3.17 percent made on Feb. 25, because the institute felt that the US Federal Reserve’s tapering and China’s efforts to fine-tune its economy would cause an adverse impact on Taiwan’s exports, he said.
Exports increased only 1 percent year-on-year last quarter, a sign that local firms did not benefit from the economic recovery in the US and Europe, Chen said.
“The most unfavorable impact to Taiwan’s manufacturing sector is the Fed’s reduction of its bond purchases, because that will cause fund outflows from emerging markets, hikes in interest rates and a possible decrease in Taiwan’s exports,” Chen said.
For this quarter, ITRI revised upward its growth forecast for manufacturing output to 3.27 percent from its previous estimate of 2.66 percent, saying “the worst is over.”
Compared with South Korea, Taiwan has been lagging “far behind” in international trade competition due to its lack of free-trade agreements, Stephen Su (蘇孟宗), director of the ITRI’s Industrial Economic Knowledge Center (IEK), said at the conference.
“Taiwanese companies should transform more aggressively in response to structural changes in their industries, and most importantly, they should understand the importance of trade agreements to the country,” Su said, adding that Taiwan can only liberalize its economy by signing free-trade agreements to stay competitive with South Korea.
Su said South Korea saw its exports grow 20.3 percent each year from 2003 to 2012, outpacing a global average of 15.75 percent, due to 47 free-trade agreements signed with countries such as Singapore, India and Chile during the same period.
Taiwan’s exports in comparison only increased 12.21 percent during the period.
“We have fallen behind, and the gap could widen” if the cross-strait service trade agreement is not ratified, Chen said.