A global economic slowdown coupled with lower consumer spending prompted a local economic think tank yesterday to lower its GDP growth forecast to 4.5 percent for this year, down from a 4.67 percent forecast in April.
The Chung-Hua Institution for Economic Research (CIER, 中經院), which publishes its findings on the economy quarterly, also sounded an alarm on inflation, noting that the consumer price index (CPI) reached 4.19 percent for the first six months, its highest level in 13 years.
The Taipei-based institute forecast an inflation rate of 3.66 percent for this year and said containing inflation was the toughest challenge facing the new government.
Wang Lee-rong (王儷容), director of CIER’s Center for Economic Forecasting, said the institute decided to adjust its GDP growth prediction downward by 0.17 percentage points after factoring in soaring fuel and raw material costs.
“The nation will continue to post economic growth in the second half of this year, driven chiefly by the government’s stimulus package,” Wang said, referring to the NT$130 billion (US$4.28 billion) spending program to expand domestic demand.
On Thursday the legislature approved the special budget that the Cabinet said would be implemented before the end of this year to raise annual GDP growth by 0.45 percent.
Wang said the program would quickly have a positive effect on the economy, unlike the lifting of restrictions governing investment in China that would take a longer time to bear fruit.
Nevertheless, CIER predicted GDP growth would slip to 3.74 percent and 3.87 percent in the third and fourth quarters respectively. The figure hit 6.06 percent for the first quarter and is estimated to dip to 4.44 percent in the second quarter, the report said.
Wang said inflation was bound to dampen demand from around the world, including China and the US, Taiwan’s two largest trading partners.
“Mounting inflationary pressure will pose the biggest challenge for the government in its attempt to invigorate the economy,” Wang said, noting that rising fuel and food costs have led consumers to rein in spending.
Daigee Shaw (蕭代基), president of CIER, warned that people would need to change their lifestyles as crude oil prices would continue to rise to US$200 or even US$300 a barrel. CIER forecast the local currency would trade at an average of NT$30.49 against the US dollar this year, appreciating 7.16 percent from last year. In Taipei trading yesterday, the NT dollar closed NT$0.001 lower at NT$30.36 versus the greenback.
Looking ahead, the NT dollar will gain another 4.01 percent to trade at NT$29.27 on average against the US dollar next year, as the greenback will still be under pressure because of the US economic slowdown, the report said.
CIER’s revised GDP forecast was lower than the government’s official forecast of 4.78 percent, the Taiwan Research Institute’s (台綜院) 4.68 percent forecast and Polaris Research Institute’s (寶華綜合經濟研究院) 4.6 percent.
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