Taiwan and South Korea have posted weak manufacturing activity in recent months, but deteriorating purchasing managers’ index (PMI) readings would affect Taiwan more negatively than its regional trading rival, DBS Bank Ltd (星展銀行) said.
“Manufacturing PMIs in South Korea and Taiwan fell below 50 in the fourth quarter of 2018,” Singapore-based DBS economist Ma Tieying (馬鐵英) said in a report on Tuesday last week, referring to the threshold that separates expansion from contraction.
The deterioration in PMI was evident in some key areas, such as new orders, export sales and production, which has also put pressure on the customs-cleared exports in the two economies, she said.
“Weak manufacturing PMIs have historically hurt GDP growth rates more in Taiwan compared with South Korea,” Ma said.
Based on the bank’s research, the economist said that Taiwan’s GDP growth weakened sharply in the years that the PMI fell below 50 points for at least half a year.
For instance, Taiwan saw GDP growth on a yearly basis drop below 1 percent for one to two quarters when the PMI contracted for seven and six months in 2011 and 2012 respectively, she said.
GDP growth had even fallen into the negative for two quarters in 2015 after the PMI dropped below 50 points for as long as eight months, she added.
In comparison, South Korea’s GDP growth has historically held up better at about 2 to 3 percent when the manufacturing PMI reading fell below 50 points, which Ma said could be attributed to the relatively strong support from its non-manufacturing sectors, including services and construction.
“Unlike South Korea, Taiwan is heavily dependent on manufacturing and less reliant on its non-manufacturing sectors,” Ma said.
There is growing concern that the contraction in Taiwan’s manufacturing PMI would extend into this year, given the deterioration in global economic conditions, the negative effect of the US-China trade dispute and the weakness expected in the electronics sector for the next few quarters, she said.
However, relatively stable domestic demand, underpinned by a steady labor market, property prices and credit growth, should help offset the weakness in manufacturing in the near term, DBS said, maintaining its GDP growth forecast for Taiwan at 2.2 percent for this year, compared with an estimated 2.7 percent increase last year.
However, “the risk of a downward forecast revision is higher for Taiwan than South Korea,” which is predicted to see GDP grow 2.6 percent this year, Ma 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
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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