The Taiwan Research Institute (台灣綜合研究院) yesterday urged the central bank to weaken the New Taiwan dollar to support the nation’s export-reliant economy, which could grow 3.35 percent this year, down from the 3.43 percent it projected six months ago.
The Taipei-based think tank made the suggestion during an economics forum where economists expressed concerns about rising competition from the technology supply chain in China.
“The central bank can lend a helping hand to local exporters by weakening the New Taiwan dollar [against the US currency],” institute president Wu Tsai-yi (吳再益) said, adding that Japan and South Korea have aggressively eased monetary policies to back their exports.
The institute expects the NT dollar to trade at an average of NT$31.43 versus the greenback this year, softer than the closing price of NT$31.266 in Taipei yesterday.
A weaker NT dollar would benefit domestic exporters that are struggling to stay competitive on the world stage, where their Chinese counterparts have increasingly turned from partners to rivals, Wu said.
The bank is due to review interest rates and other monetary issues at its quarterly board meeting next week.
The institute expects exports to grow 4.84 percent this year from last year, down from a forecast made in December last year of 6.87 percent growth.
Taiwan must not ignore or minimize the challenges posed by the rise of the Chinese supply chain, National Central University economics professor Dachrahn Wu (吳大任) told the forum.
Taiwanese smartphone vendor HTC Corp (宏達電) losing market share to Chinese smartphone maker Xiaomi Inc (小米) reflects this trend, Dachrahn Wu said.
While currency depreciation would help enhance competitiveness for Taiwanese exporters, local firms must upgrade their technology and services to retain customers, he said.
Exports to China, the largest destination for Taiwanese exports with a 40 percent share, contracted by 6.9 percent from a year ago to US$46.67 billion for the first five months of this year, data from the Ministry of Finance showed.
The decline, while related to an economic slowdown in China, shows that China is cutting dependence on Taiwan for imports of electronic devices and technology solutions, he said.
The rise of the Chinese supply chain also weighs on global trade as Beijing seeks to focus on domestic demand through economic reform, Directorate-General of Budget, Accounting and Statistics Deputy Director Tsai Yu-tai (蔡鈺泰) said.
China’s adjustments have dampened global trade and the impact on Taiwan is more evident given its small GDP growth in recent years, Tsai said.
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