The manufacturing sector’s production value is forecast to dip 2.93 percent annually to NT$18.94 trillion (US$619.1 billion) this year, as a prolonged US-China trade war and falling crude oil prices hurt exports, the Industrial Technology and Research Institute (ITRI, 工研院) said yesterday.
That was a downward revision from its May forecast of 0.02 percent growth to NT$19.56 trillion, the ITRI said.
An influx of new investments totaling NT$615 billion by Taiwanese manufacturers to move production out of China would not help this year’s output growth, as most of the capacity buildup would happen next year, or even later, it said.
“Since the beginning of this year, Taiwan’s export orders have shown some weakness due to the trade dispute between the US and China. The trade row has depressed external demand for goods made by Taiwanese companies,” ITRI manager Patrick Liou (劉名寰) said.
“In addition, a correction in global crude oil prices is weighing heavily on the [manufacturing sector’s] production value. The impact is spreading from the petrochemical segment to all segments,” Liou said.
Global crude oil prices are expected to fall 11.26 percent to US$63 per barrel this year from US$71 last year, Liou said, citing forecasts by the US Energy Information Administration.
The petrochemical segment is to suffer the brunt, posting a deeper decline of 5.08 percent annually this year to NT$4.88 trillion, compared with an earlier estimate of a 0.85 percent reduction.
The information and communications technology segment, the largest contributor to the manufacturing sector, is to see a faster decline of 1.64 percent to NT$6.4 trillion in production value this year, rather than dropping 0.6 percent annually as estimated earlier, the ITRI said.
The base metals and machinery segment is forecast to see production shrink 4.41 percent to NT$5.28 trillion this year, rather than growing 0.85 percent annually as was previously forecast.
Liou attributed the sharper decline to slower economic growth in China, as Taiwanese machinery suppliers are heavily reliant on the Chinese market.
The livelihood segment — including the textile and tourism industries — is expected to be the only segment that would eke out an annual growth of 1.26 percent to NT$2.38 trillion this year, according to the ITRI’s forecast.
The institute expects the manufacturing sector to recover mildly next year, with production value increasing 1.28 percent to NT$19.18 trillion amid an improving global economy and rebounding crude oil prices.
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