The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday cut its forecast for GDP growth this year from 1.84 percent to 1.53 percent, saying the nation’s export-reliant economy has yet to hit rock bottom, as indicated by disappointing bellwethers.
It is the first downward revision by domestic research institutes this year and others could follow to reflect escalating downside risks.
“External demand might not recover much due to a lack of breakthrough electronic innovations on the horizon. Ongoing wide financial swings could foster conservative spending by consumers,” TIER economic forecasting center director Gordon Sun (孫明德) told a media briefing.
The scenarios, coupled with sustained slumping oil prices, suggest another year of sluggish growth, despite a low comparison base last year, Sun said.
The weekend snow storm in the US drove crude oil prices up noticeably, but the spike is likely to prove a fleeting phenomenon, as oil export nations refuse to rein in the supply glut, Sun said.
Companies worldwide have hesitated to replenish oil-related inventories on concerns that their costs might drop lower later and demand could turn out weaker than expected, the Taipei-based think tank said.
Expectations are unfavorable for economic recovery abroad and in Taiwan, where oil-related exports account for 20 percent of overall outbound shipments, the TIER said.
The institute forecast the economy could grow an insignificant 0.29 percent in the current quarter, down sharply from 4.04 percent during the same period last year.
Export orders, which foretell actual exports in the coming one to three months, plunged 12.3 last month from a year earlier, indicating the economy is not yet showing signs of stabilizing, Sun said.
Exports might expand a mild 2.02 percent this year from last year, while imports could increase 2.62 percent, the TIER report said.
Outbound shipments stripping services could contract by 7.38 percent in the first quarter and by 3.93 percent next quarter before recovering to expansion mode in the second half, the report said.
That leaves domestic demand to underpin the economy for the time being, but recent financial market volatility might translate into asset losses on the part of corporate and retail investors, Sun said.
Negative wealth effects might prompt consumers to be cautious about spending, despite the advent of the Lunar New Year holiday, the traditional high season for sales of clothing, food and beverages, and accommodation providers, Sun said.
Private consumption is expected to increase 2.42 percent this year, while private investment is expected to pick up 2.98 percent, the report said.
The power transition means policy uncertainty and firms are likely to play it safe by waiting on the sidelines until things settle, Sun said.
“The new government is to inherit quite a few economic challenges that require wisdom and prowess to resolve,” the economist said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last