The central bank is likely to start mildly increasing its policy interest rates next year, as the economic growth momentum outlook is positive for the first half, Cathay Financial Holding Co (國泰金控) said yesterday.
The economy is expected to grow steadily, with the central bank expecting GDP to grow 2.35 next year, National Central University economics professor Hsu Chih-chiang (徐之強) said.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) has raised its inflation forecast for this year to 0.96 percent, Hsu said, adding that the indicators provide the conditions for the central bank to start raising interest rates next year.
As the New Taiwan dollar is not expected to appreciate strongly next year, it is likely that under new leadership following the retirement of central bank Governor Perng Fai-nan (彭淮南), the bank would increase interest rates for the first time after six quarters, Hsu added.
A research team for Cathay Financial, led by Hsu, set its GDP growth forecast for next year at 2 percent, lower than the DGBAS’ 2.29 percent, and falling short of the 2.58-to-2.7 percent range for this year forecast by the company.
The research team’s forecast is low because the nation is approaching the end of its expansionary business cycle, which began in November 2015, and while global economic growth remains sound, lagging private investment, in particular in the semiconductor sector, would drag on the economy in the second half of next year, Hsu said, adding that government spending would be vital in making up the shortfall.
The government’s decision to raise public sector wages by 3 percent would only provide limited stimulus to consumption, as the increase is allocated to base pay, which accounts for a small part of total income, Hsu said.
Gains from the wage hike would also be offset by ongoing pension reforms and dampen spending by public-sector employees, Hsu added.
Separately, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said that two out of three major sub-indices of its business sentiment gauge continued to decline last month.
Both the manufacturing and services industries sub-indices fell for the third consecutive month last month, while the construction industry expanded to recover from a sequential decline.
The institute said that the manufacturing industry is approaching the end of the high season for consumer electronics shipments, with the service industry facing the same headwind, as seasonal promotional campaigns by retailers conclude.
However, the sub-index for the property market hit a 55-month high, after a significant rebound in residential and commercial housing transactions in the six largest cities last month, the organization said.
Property developers were far more optimistic, as the sub-index for the construction sector rose 6.46 points from a month earlier to 100.15 last month.
The improving sentiment in the construction sector is due mainly to a 24.3 percent monthly increase in transactions of homes, shops and offices in Taiwan’s six largest cities last month, TIER research fellow Liu Pei-chen (劉佩真) said.
In October, residential and commercial property sales in the six cities — Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung — fell 11.8 percent from a month earlier.
SELF-SUFFICIENCY: Alibaba is one of a number of Chinese firms that has answered Beijing’s call to invest in the development of cutting-edge technologies Alibaba Group Holding Ltd (阿里巴巴) yesterday unveiled a new server chip that is based on advanced 5-nanometer technology, marking a milestone in China’s pursuit of semiconductor self-sufficiency. The Chinese tech giant’s newest chip is based on micro-architecture provided by the SoftBank Group Corp-owned Arm Ltd, it said. Alibaba, which is holding its annual cloud summit in Hangzhou, China, said that the chip is to be used in its own data centers in the “near future” and would not, for the time being, be sold commercially. “Customizing our own server chips is consistent with our ongoing efforts toward boosting our computing capabilities with better
‘SHORT-TERM ECONOMIC PAIN’: A military takeover would only temporarily weigh on wafer production on both sides of the Taiwan Strait, IC Insights said Taiwan has more chip manufacturing capacity than any other economy in the world, US-based market information advisory firm IC Insights said in a research paper last week, cautioning that the nation’s strength could prompt China to attempt to take over Taiwan. Taiwan commanded 21.4 percent of global installed IC capacity, ahead of South Korea’s 20.4 percent, Japan’s 15.8 percent and China’s 15.3 percent, North America’s 12.6 percent and Europe’s 5.7 percent, IC Insights said. Taiwan is one of two countries that uses 10-nanometer technology or better to produce wafers, holding 62.8 percent of global capacity, with South Korea holding the remaining 37.2
AGGRESSIVE STEP: With the new processors, Apple is aiming at the high-end chips Intel has provided for the MacBook Pro and other top-end Macs for about 15 years Apple Inc on Monday took the most aggressive step yet to strip Intel Corp chips from its computers, announcing more powerful homegrown Mac processors alongside a total revamp of its MacBook Pro laptop computers. The company showcased the chips at an event called “Unleashed,” which also included its latest audio products. The new components, called the M1 Pro and M1 Max chips, are 70 percent faster than its M1 predecessors, Apple said. It also unveiled a redesigned MacBook Pro, adding larger screens, MagSafe charging and better resolution. With the new processors and devices, Apple is aiming squarely at the high-end chips that Intel has
PRICE SPREAD: Oil trading under the Brent futures contract is giving the US a hefty edge in pricing, increasing the rush to secure cheap fuel as winter approaches Asian demand for US oil is rising as the energy crisis boosts prices for other crudes that are priced against the global Brent futures contract. China and other Asian buyers have been snapping up supertankers of US oil for delivery next month and seeking more for December, some traders have said. Most buyers are seeking US grades that had recently slumped to the lowest levels in more than a year, with an added incentive after Beijing awarded millions of tonnes of crude oil import quotas. A wide spread between Brent and West Texas Intermediate (WTI) oil futures is accommodating higher US crude