The government yesterday raised its economic growth forecast for this year to 3.78 percent, amid expectations that lower energy costs would encourage companies and consumers to spend more.
That is up from its forecast of 3.5 percent growth in November and represents the fastest pace of expansion in three years, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said.
GDP growth could rise by 0.26 percentage point for each 10 percent decline in international crude prices, the statistics agency said, as Taiwan relies on imports for 99 percent of its oil demand.
Growth projections for this year were revised after the latest figures showed that the economy expanded 3.35 percent last quarter and 3.74 percent for the whole of last year, both exceeding estimates of 3.17 percent and 3.51 percent respectively, the agency said in a report.
“Growth momentum will extend into this year as lower oil prices are favorable to corporate earnings and consumer spending,” DGBAS Minister Shih Su-mei (石素梅) said.
The savings in energy costs will translate into higher profit margins and give companies more room to increase wages, Shih added.
DGBAS updated its growth forecast based on crude prices trading at an average of US$58 a barrel this year, down 30 percent from US$82.5 a barrel projected in November.
Though exports are expected to increase 7.26 percent this year, down 2.54 percentage points from the previous estimate, the resultant trade surplus could widen to US$48.44 billion this year, from US$39.58 billion last year, thanks to cheaper imports, the report said.
Chipmakers and other firms are poised to buy more capital equipment to meet demand for high-end technology, Shih said.
Private investment is expected to expand by 5.98 percent this year, up for a third consecutive year, the DGBAS report showed.
Likewise, private consumption may fare stronger at 3.12 percent this year, up from 2.7 percent in the last forecast, as consumers shift energy and transportation savings to other spending, DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) said.
A stable job market and wage increases should lend support to private consumption, Tsai said.
Domestic demand is expected to lift GDP growth by 2.43 percentage points this year, accounting for 64.29 percent of the expansion, the report said.
Despite stronger spending, consumer price growth is expected to ease to 0.26 percent this year, with the inflationary gauge likely slipping into negative territory in the first half, the report said.
Tsai dismissed deflationary concerns, saying that cheaper oil costs rather than weak demand account for the deceleration in consumer prices.
“The inflationary reading would remain in the positive zone the entire year if oil prices are excluded,” Tsai said.
Despite its benefit, oil price volatility also poses the biggest downside risk as it is dragging exports of minerals, chemicals and plastic products, the report said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) secured a record 70.2 percent share of the global foundry business in the second quarter, up from 67.6 percent the previous quarter, and continued widening its lead over second-placed Samsung Electronics Co, TrendForce Corp (集邦科技) said on Monday. TSMC posted US$30.24 billion in sales in the April-to-June period, up 18.5 percent from the previous quarter, driven by major smartphone customers entering their ramp-up cycle and robust demand for artificial intelligence chips, laptops and PCs, which boosted wafer shipments and average selling prices, TrendForce said in a report. Samsung’s sales also grew in the second quarter, up
LIMITED IMPACT: Investor confidence was likely sustained by its relatively small exposure to the Chinese market, as only less advanced chips are made in Nanjing Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) saw its stock price close steady yesterday in a sign that the loss of the validated end user (VEU) status for its Nanjing, China, fab should have a mild impact on the world’s biggest contract chipmaker financially and technologically. Media reports about the waiver loss sent TSMC down 1.29 percent during the early trading session yesterday, but the stock soon regained strength and ended at NT$1,160, unchanged from Tuesday. Investors’ confidence in TSMC was likely built on its relatively small exposure to the Chinese market, as Chinese customers contributed about 9 percent to TSMC’s revenue last
LOOPHOLES: The move is to end a break that was aiding foreign producers without any similar benefit for US manufacturers, the US Department of Commerce said US President Donald Trump’s administration would make it harder for Samsung Electronics Co and SK Hynix Inc to ship critical equipment to their chipmaking operations in China, dealing a potential blow to the companies’ production in the world’s largest semiconductor market. The US Department of Commerce in a notice published on Friday said that it was revoking waivers for Samsung and SK Hynix to use US technologies in their Chinese operations. The companies had been operating in China under regulations that allow them to import chipmaking equipment without applying for a new license each time. The move would revise what is known
UNCERTAINTY: A final ruling against the president’s tariffs would upend his trade deals and force the government to content with billions of dollars in refunds The legal fight over US President Donald Trump’s global tariffs is deepening after a federal appeals court ruled the levies were issued illegally under an emergency law, extending the chaos in global trade. A 7-4 decision by a panel of judges on Friday was a major setback for Trump, even as it gives both sides something to boast about. The majority upheld a May ruling by the Court of International Trade that the tariffs were illegal. However, the judges left the levies intact while the case proceeds, as Trump had requested, and suggested that any injunction could potentially be narrowed to apply
RSS