Taiwan is likely to have slipped into recession, as evidenced by a general slowdown in economic activity this and last quarter, driving the central bank on Thursday to cut interest rates in a bid to reverse the downturn, economists said yesterday.
The rate cut, the first in six years, may do little if companies shy away from investment and consumers tighten their belts, economists said.
“We are definitely in a recession, given sustained declines of economic data, though some may disagree about its definition,” Yuanta-Polaris Research Institute (元大寶華研究院) chairman Liang Kuo-yuan (梁國源) said by telephone.
The EU defines recession as two consecutive quarters of negative economic growth, as measured by the seasonal adjusted quarter-on-quarter figures for real GDP.
Taiwan already recorded a downturn of 6.56 percent last quarter in terms of the seasonally adjusted annual rate and is bound for further contraction this quarter, whether compared with last quarter or a year earlier, several research institutes have predicted.
That would signify a recession and suggest a need for stronger measures.
However, the Directorate-General of Budget, Accounting and Statistics (DGBAS) gauges the nation’s economic health by comparing current data with their levels in the previous year.
By that account, the shadow of recession is still escalating, especially if international crude prices fail to stabilize, hurting non-tech exports, despite an expected rebound in electronics shipments next quarter, Taiwan Institute of Economic Research (TIER, 台經院) economist Gordon Sun (孫明德) said.
The government’s forecast last month of 0.1 percent growth for this quarter looks increasingly unachievable, after latest data about exports, industrial production and commercial sales all fared worse than expected, a DGBAS official who declined to be named told the Taipei Times yesterday.
The official declined to elaborate, saying that the DGBAS will update its economic growth data for Taiwan at the end of next month.
Economists said interest rate cuts cannot spur private investment interest if the nation continues to concentrate on a few industries and export markets, given that global trade has slowed this year.
Exports account for 70 percent of Taiwan’s GDP — with 40 percent of the nation’s outbound shipments — mostly electronic devices — destined for China, according to government data.
“Monetary policy is no substitute for a structural reform if the government aims to reinvigorate the economy,” Liang said.
Local companies must actively tap Internet-linked business opportunities that promise higher added value, rather than struggle with low-margin business, he said.
KGI Securities Co (凱基證券) economist Andrew Tsai (蔡耀德) said the economy has sank into recession, if only technically, to which a rate cut of 12.5 basis points provides no remedy.
“A lack of investment opportunities drives up savings and lower borrowing costs cannot reverse the situation,” Tsai said.
A further rate cut would be counterproductive because it could send a negative message about the economy and deepen cautious sentiment, as happened when Wall Street stumbled after the US Federal Reserve left its rate unchanged last week, Tsai said.
Sweeping policy changes under US Secretary of Health and Human Services Robert F. Kennedy Jr are having a chilling effect on vaccine makers as anti-vaccine rhetoric has turned into concrete changes in inoculation schedules and recommendations, investors and executives said. The administration of US President Donald Trump has in the past year upended vaccine recommendations, with the country last month ending its longstanding guidance that all children receive inoculations against flu, hepatitis A and other diseases. The unprecedented changes have led to diminished vaccine usage, hurt the investment case for some biotechs, and created a drag that would likely dent revenues and
Global semiconductor stocks advanced yesterday, as comments by Nvidia Corp chief executive officer Jensen Huang (黃仁勳) at Davos, Switzerland, helped reinforce investor enthusiasm for artificial intelligence (AI). Samsung Electronics Co gained as much as 5 percent to an all-time high, helping drive South Korea’s benchmark KOSPI above 5,000 for the first time. That came after the Philadelphia Semiconductor Index rose more than 3 percent to a fresh record on Wednesday, with a boost from Nvidia. The gains came amid broad risk-on trade after US President Donald Trump withdrew his threat of tariffs on some European nations over backing for Greenland. Huang further
CULPRITS: Factors that affected the slip included falling global crude oil prices, wait-and-see consumer attitudes due to US tariffs and a different Lunar New Year holiday schedule Taiwan’s retail sales ended a nine-year growth streak last year, slipping 0.2 percent from a year earlier as uncertainty over US tariff policies affected demand for durable goods, data released on Friday by the Ministry of Economic Affairs showed. Last year’s retail sales totaled NT$4.84 trillion (US$153.27 billion), down about NT$9.5 billion, or 0.2 percent, from 2024. Despite the decline, the figure was still the second-highest annual sales total on record. Ministry statistics department deputy head Chen Yu-fang (陳玉芳) said sales of cars, motorcycles and related products, which accounted for 17.4 percent of total retail rales last year, fell NT$68.1 billion, or
HSBC Bank Taiwan Ltd (匯豐台灣商銀) and the Taiwan High Prosecutors Office recently signed a memorandum of understanding (MOU) to enhance cooperation on the suspicious transaction analysis mechanism. This landmark agreement makes HSBC the first foreign bank in Taiwan to establish such a partnership with the High Prosecutors Office, underscoring its commitment to active anti-fraud initiatives, financial inclusion, and the “Treating Customers Fairly” principle. Through this deep public-private collaboration, both parties aim to co-create a secure financial ecosystem via early warning detection and precise fraud prevention technologies. At the signing ceremony, HSBC Taiwan CEO and head of banking Adam Chen (陳志堅)
RSS