The top concern for Asia is an expected slowdown in growth in the US, a senior official at Fitch Ratings said yesterday, emphasizing that the region has yet to wean itself away from demand in the world's largest economy.
"The biggest threat that we see to Asian growth going forward is a slowdown in the US, which is something we do expect to happen later this year as higher interest rates start to take hold," James McCormack, Fitch's head of Asia Sovereign Ratings, told reporters.
"Even though China is absorbing more of the rest of Asia's exports [as] the US is absorbing less, a lot of that trade is then finding its way to the US," said Hong Kong-based McCormack, who was visiting Seoul for an investment seminar.
US growth accelerated in the first quarter of this year, growing an annualized 4.8 percent, a sharp rebound from the 1.7 percent recorded in the final three months of last year. US Federal Reserve Chairman Ben Bernanke said he expected growth to moderate in coming quarters.
The IMF predicted last month that the US will grow 3.4 percent this year and 3.3 percent next year, both slightly slower than last year's 3.5 percent.
McCormack cited the example of exports of intermediate goods from countries like South Korea to China, where finished products are assembled and then shipped to the US.
"So China has become a part of a regional manufacturing process," McCormack said.
He added, however, that "final demand in the US is still what matters for Asia."
China, the world's fastest growing major economy, expanded 10.2 percent in the first quarter from the same period last year. The World Bank yesterday raised its forecast for economic growth this year to 9.5 percent from an earlier forecast of 9.2 percent.
But the World Bank urged China to allow its currency to appreciate faster, saying a stronger yuan would help rebalance the nation's trade surplus and ease domestic economic problems.
"Accelerating appreciation [of the yuan] would also help reduce current account surpluses and rebalance growth towards consumption," the World Bank said as it released a quarterly report.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS