Australia and New Zealand Banking Group (ANZ) yesterday significantly raised its forecast for the nation’s GDP growth this year and next year as local technology firms outperform their regional rivals by shifting production back home to ease the impact of a US-China trade dispute.
ANZ expects the economy to expand 2.3 percent this year and 2.1 percent next year, up from 1.8 percent and 1.5 percent respectively, propelled mainly by a strong private investment.
“Taiwan’s GDP growth surprisingly outperformed that of other Asian electronics exporters, namely South Korea and Singapore, prompting us to reassess our forecast,” ANZ greater China senior economist Betty Wang (王蕊) said.
Government policy measures have been successful in bringing back manufacturers of high-value products, which would provide support to private investment and exports in the short term, Wang said after visiting Taiwan.
Several large Taiwanese manufacturers have shifted their production lines back home, and factory space and equipment are available in industrial areas, enabling production to commence quickly, Wang said.
Private investment, a key GDP component, jumped 5.2 percent in the past five quarters, while machinery imports, a barometer of corporate investment, surged an average 18 percent per month this year, she said.
There are also signs of recovery in the global semiconductor industry, lifting the outlook of the Taiwanese technology sector, she added.
A better-than-expected reception for new-generation smartphones is shoring up sentiment this quarter and a pickup in 5G demand from China could maintain the momentum going into next year, Wang said.
However, the relocation of production is not perennial and its magnitude could also be capped by supply constraints, such as labor and electricity, she said.
The recovery in the global semiconductor sector is not yet well-established given that corporate revenues are still declining, albeit at a slower pace, she added.
“As such, we remain cautious about Taiwan’s growth outlook in the second half of the year, not to mention the uncertainties surrounding the China-US trade negotiations,” Wang said.
An improved outlook for the semiconductor sector reinforces the view that the central bank would maintain its key policy interest rate at 1.375 percent for the foreseeable future, ANZ said, adding that the bank is under no pressure to cut its policy rates unlike its peers overseas.
A stock market rally amid robust inflows of foreign funds has boosted consumer sentiment and kept private consumption steady, it said.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to