Fitch Ratings Ltd has lowered its forecast of the nation’s GDP growth for this year, citing disappointing export performance.
In its Taiwan Banks Report Card released on Thursday, Fitch said that the economy is short of a boost from its outbound sales and after taking the adversity caused by weak global demand into account, it was reducing its forecast from its previous estimate of 1.5 percent to 1 percent.
The forecast showed that the agency is more cautious about the economy than the government.
The Directorate-General of Budget, Accounting and Statistics last month raised its economic growth forecast for this year to 1.22 percent, up 0.16 percentage points from its previous estimate, due to improving exports and private consumption.
In the first eight months of this year, exports totaled US$180.1 billion, down 6.6 percent from a year earlier, but outbound sales for last month rose 1 percent year-on-year. It was the second consecutive month that an annual increase was recorded.
The Ministry of Finance earlier this month said that export growth momentum is expected to continue into this month due to the peak season for the global technology industry.
Exports account for about 60 percent of Taiwan’s GDP.
Fitch said the momentum of economic growth would pick up next year, with GDP likely to grow by 1.7 percent.
It said that Taiwan’s economic weakness and China’s slowdown are expected to have an adverse effect on the bottom line of the local banking sector, which has a large exposure to China.
The unfavorable economic circumstances are expected to take a toll on the quality of banks’ loans, it said.
According to central bank statistics, outstanding international claims by Taiwanese banks to China on a direct risk basis stood at about US$43.2 billion at the end of March, down US$6 billion, or 12.12 percent, from the end of December last year. China remains the banking sector’s second-largest debtor, the central bank’s data showed.
A narrowing interest rate spread and an increase in defaults caused by a weaker economy would reduce the banking sector’s profit this year and next, Fitch said.
Smaller private Taiwanese banks especially could feel a more obvious impact at a time when the local property market has been slow, Fitch said.
However, the outlook for Taiwanese banks’ ratings remains largely stable, since downside risks faced by the banks are generally manageable due to their enhanced and adequate risk buffers, modest leverage and healthy liquidity, Fitch said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
TAIWAN VALUE CHAIN: Foxtron is to fully own Luxgen following the transaction and it plans to launch a new electric model, the Foxtron Bria, in Taiwan next year Yulon Motor Co (裕隆汽車) yesterday said that its board of directors approved the disposal of its electric vehicle (EV) unit, Luxgen Motor Co (納智捷汽車), to Foxtron Vehicle Technologies Co (鴻華先進) for NT$787.6 million (US$24.98 million). Foxtron, a half-half joint venture between Yulon affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai Precision Industry Co (鴻海精密), expects to wrap up the deal in the first quarter of next year. Foxtron would fully own Luxgen following the transaction, including five car distributing companies, outlets and all employees. The deal is subject to the approval of the Fair Trade Commission, Foxtron said. “Foxtron will be
INFLATION CONSIDERATION: The BOJ governor said that it would ‘keep making appropriate decisions’ and would adjust depending on the economy and prices The Bank of Japan (BOJ) yesterday raised its benchmark interest rate to the highest in 30 years and said more increases are in the pipeline if conditions allow, in a sign of growing conviction that it can attain the stable inflation target it has pursued for more than a decade. Bank of Japan Governor Kazuo Ueda’s policy board increased the rate by 0.2 percentage points to 0.75 percent, in a unanimous decision, the bank said in a statement. The central bank cited the rising likelihood of its economic outlook being realized. The rate change was expected by all 50 economists surveyed by Bloomberg. The
RSS