Taiwan’s economy may contract in the third quarter, the first such contraction since 2003, as the fallout of the US financial crisis trims global demand for Taiwanese goods and domestic demand weakens, a Standard Chartered Bank report said last week.
“We see the possibility of a mild 0.4 percent year-on-year contraction in real GDP for the third quarter, the first annual decline since the second quarter of 2003,” Tony Phoo (符銘財), chief economist of Standard Chartered Bank (Taiwan), wrote in the report Taiwan — Re-assessing the 2008-09 Growth Outlook, which was released on Thursday.
Phoo said the quarterly contraction in GDP growth was attributable to “a significant drop in the trade surplus and declines in industrial output and retail sales” in the July-August period.
The economy declined 0.12 percent in the second quarter of 2003 because of the SARS outbreak. In November 2005, however, the government revised the figure to 0.11 percent growth, after the Directorate General of Budget, Accounting and Statistics (DGBAS) adopted a new calculation system, 93SNA (System of National Accounts), which was introduced by the UN in 1993.
Taiwan, like the other export-oriented economies in the region, depends on a prosperous world market for information technology products and other items that support its economy.
But after exports fell by 1.6 percent year-on-year last month and given the fast deteriorating global economic conditions in the short term, Standard Chartered revised its GDP growth forecast for Taiwan to 2.8 percent this year and 3.1 percent next year, from its previous estimates of 3.5 percent and 4.8 percent respectively, the report said.
“In a nutshell, we expect Taiwan to register sub-par growth performance over the next few quarters due to sharply slowing external demand alongside dimming prospects for the domestic sector, in particular employment and corporate investment,” Phoo wrote.
The DGBAS forecast on Aug. 22 that the economy would grow 3.04 percent year-on-year in the third quarter, 4.3 percent this year and 5.08 percent next year. The agency is scheduled to update its forecasts late next month.
The latest prediction by Standard Chartered followed a slew of downward forecasts by Deutsche Securities, Morgan Stanley and the IMF. It also came after Singapore’s latest economic data showed on Friday that its GDP fell 0.5 percent year-on-year in the third quarter, following a revised 2.3 percent growth in the previous quarter.
In a report released last week by Deutsche Securities’ Taipei-based economists, led by Julian Wang (王俊朗), the German brokerage predicted Taiwan’s GDP growth would drop to 3.4 percent this year and 1 percent next year, from the 4.3 percent and 3.3 percent respectively it forecast in June.
Deutsche Securities’ projection of 1 percent growth for next year, if it materializes, would be a new low after Taiwan recorded a GDP contraction of 2.17 percent in 2001 and 1.38 percent in 1974 because of the oil crisis that year.
In comparison, Morgan Stanley cut its growth forecast for Taiwan to 3.4 percent next year from the 4.8 percent it predicted in March, while the IMF lowered its forecast for next year to 2.5 percent from its April estimate of 4.1 percent.
To prop up falling equity prices that have depressed consumer confidence and domestic spending, the government recently introduced new plans to cushion the impact of the global financial crisis. But Phoo said policymakers in Taiwan have few alternatives to address the slowdown problem effectively.
The TAIEX has declined 39.69 percent since the beginning of the year, falling to 5,130.71 points on Thursday, its lowest close since it finished at 5,095.31 on July 3, 2003.
The TAIEX has fallen 43.43 percent since President Ma Ying-jeou’s (馬英九) administration took office on May 20, Taiwan Stock Exchange’s data showed.
SEMICONDUCTORS: The German laser and plasma generator company will expand its local services as its specialized offerings support Taiwan’s semiconductor industries Trumpf SE + Co KG, a global leader in supplying laser technology and plasma generators used in chip production, is expanding its investments in Taiwan in an effort to deeply integrate into the global semiconductor supply chain in the pursuit of growth. The company, headquartered in Ditzingen, Germany, has invested significantly in a newly inaugurated regional technical center for plasma generators in Taoyuan, its latest expansion in Taiwan after being engaged in various industries for more than 25 years. The center, the first of its kind Trumpf built outside Germany, aims to serve customers from Taiwan, Japan, Southeast Asia and South Korea,
Gasoline and diesel prices at domestic fuel stations are to fall NT$0.2 per liter this week, down for a second consecutive week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to drop to NT$26.4, NT$27.9 and NT$29.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to fall to NT$24.8 per liter at CPC stations and NT$24.6 at Formosa pumps, they said. The price adjustments came even as international crude oil prices rose last week, as traders
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
RSS