The ongoing water shortage poses a serious downside risk to the economy, which has achieved stability as cheaper fuel expenses boost corporate profits and consumer spending, Yuanta-Polaris Research Institute (元大寶華研究院) said yesterday.
Water rationing could affect the output of major industries by up to 20 percent, removing as much as 0.825 percentage point from GDP growth this year — if the water shortage persists, institute chairman Liang Kuo-yuan (梁國源) said on the sidelines of a quarterly news conference.
However, the chances of that outcome coming to pass are diminishing amid this week’s precipitation and the upcoming monsoon season, the economist said.
Photo: Yang Chin-cheng, Taipei Times
Manufacturers across sectors including metals, petrochemicals, textiles and paper products, as well as critical electronic components, are more vulnerable to water rationing, he said, adding that they account for 16.7 percent of GDP.
However, a more likely scenario this year is a 5 percent decline in total output due to the water shortage, with GDP growth softened by 0.2 percentage points, Liang said.
“That means the nation’s economy may manage to stay above 3.5 percent this year,” he said.
Photo: Wang Meng-lun, Taipei Times
The Taipei-based think tank yesterday raised its forecast for GDP growth to 3.66 percent for this year, from 3.45 percent it projected three months earlier, citing stronger private consumption and net exports attributable mainly to cheaper fuel and electricity costs.
Global trade improved in the second half of last year and the trend is expected to continue this year, although the volume has yet to recover to the levels seen before the global financial crisis in 2008, the institute said.
Exports contracted 1.3 percent for the first two months of this year, but cheaper crude prices helped lower imports by a faster pace and therefore widened trade surpluses, government data showed.
Energy cost savings allow companies to post stronger earnings and individuals to buy more non-fuel items, the institutes said.
International researchers report that demand for Apple Inc’s iPhone and other electronic devices remain strong and local companies in the supply chain may continue to thrive, Liang said.
Companies involved in non-tech sector exports could extend a lackluster performance from last year as crude prices might not stage a comeback soon, he said.
Given that, Yuanta-Polaris cut its forecast for consumer price growth to a record low of 0.1 percent this year.
Liang dismissed deflation concerns, saying that prices for food and non-fuel consumption continue to climb.
The pace of interest rate hikes by the US is likely to pose another headwind for the local economy, as global fund movements could hit the local bourse more intensely, the economist said.
The central bank may step in to stabilize the local currency, which may trade at an average of NT$31.9 against its US counterpart this year, the institute said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure