DBS Bank yesterday cut its GDP growth forecast for Taiwan this year to 0.9 percent, from the 1.4 percent it predicted earlier, saying the nation might have the slowest-growing economy among Asia’s newly industrialized economies for the second year running due to soft exports.
“The slump in exports is the main cause of Taiwan’s underperformance, and a turnaround seems unlikely in the short to medium term, as the Chinese economy is expected to follow an L-shaped growth trend” in the coming years, Singapore-based DBS Bank economist Ma Tieying (馬鐵英) said in a report.
Taiwan’s export-oriented economy will suffer further amid China’s slowdown because China and Hong Kong account for 40 percent of Taiwanese exports, Ma said.
Adding to concerns is that Taiwan is losing competitiveness in the Chinese market, the economist said, citing Taiwan’s fall in market share for China’s imports of chemicals from 11.4 percent in 2010 to 7.6 percent last year.
Taiwan’s share of China’s imports of plastics and rubbers also dropped, from 13.4 percent to 11 percent over the same period.
Also worrying is that Taiwan’s exports are highly dependent on the electronics sectors, with the combined share of electronic parts and components, information and communication products and precision instruments standing close to 50 percent, the economist said.
The global smartphone industry is slowing due to technology maturation, the lack of new innovation and increasing market saturation, Ma said. It remains in question whether Apple Inc’s upcoming iPhone 7 series can beat its existing models in terms of sales after the US technology titan reported its first year-on-year sales decline in the first quarter, Ma said.
The government has sought to ease the overconcentration by diversifying export markets and industrial composition.
It will take a long time to adjust the structure of exports and substantial changes are unlikely to materialize in the short run, Ma said.
The central bank might stimulate growth by cutting interest rates by 12.5 basis points later this month and in September, Ma said.
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TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day