Taiwan might have difficulty revitalizing its economy this year after slipping into a recession in the second half of last year and has yet to show signs of recovery, two foreign banks said.
DBS Bank and Deutsche Bank cut their growth forecast for Taiwan this year from 2.4 percent to 1.8 percent, after the nation’s export-reliant economy contracted 0.28 percent last quarter, bucking a 0.49 percent uptick that the government’s statistics agency had predicted earlier.
Taiwan entered recession after GDP logged two consecutive quarters of decline, the worst since 2009, even though the economy managed a 0.85 percent growth for the whole of last year.
“The recovery outlook remains elusive, because the deterioration in export orders in December last year dashed any hope for a quick turnaround in exports, industrial production and private investment in the coming months,” DBS said in a report.
Growth would stay at low levels in the first half of this year, the bank said, at variance with popular belief that the economy would fare better this year.
Taiwan’s expectations of improvement rely on recovery in the US economy, the stabilization of the slowdown in China and tapering off of the disruptions on oil prices, all of which are going counter to expectations, the bank said.
Deutsche Bank said it is not surprised at the decline in economic activities last quarter, although the pace beat its forecast of 0.1 percent. Lingering global technology inventory adjustments are to blame, the German lender said in a report.
Worse still, the economy appears yet to have bottomed out and might see another quarter of contraction, Deutsche Bank said.
“We see a material chance of contraction in the current quarter and precarious global financial market conditions merit a downward revision in our GDP forecast,” the bank said in its report.
Downside risks are intensifying due mainly to uncertainty surrounding the growth in the US and China, it said.
Market volatility in China and oil price declines bode ill for Taiwan’s trade performance in the foreseeable future, given its heavy economic dependence on China, the two banks said.
Minister of Finance Chang Sheng-ford (張盛和) yesterday said that exports contracted by a double-digit percentage last month. The ministry is to unveil detailed figures on Feb. 16.
Private consumption might not pick up significantly even though the government has provided subsidies for domestic travel and energy-efficient home appliance purchases, the two lenders said.
The central bank might step in and cut interest rates by 12.5 basis points each in March and June, they said.
The central bank might also allow the New Taiwan dollar to weaken to boost export competitiveness, the banks said.
“The New Taiwan dollar may soften to NT$36 against the US counterpart at the end of this year,” Deutsche Bank said.
The government is likely to offer more subsidies to boost consumption and tourism, it said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to