Academia Sinica, Taiwan’s top research institute, yesterday trimmed its GDP forecast for this year to an unprecedented decline of 3.46 percent, down from a December forecast of 0.56 percent growth, but declared the worst of the downturn is over.
Despite the downward revision, Wu Chung-shu (吳中書), an economic research fellow who delivered the report on the institute’s behalf, said the economy is on the way to a slow and protracted recovery.
“We expect the nation’s economy to contract 3.46 percent this year, the most ever,” Wu told a media briefing.
The economist attributed the economic woes to sharp drops in external demand, private investment and consumption following the financial crisis.
GDP, which contracted 10.24 percent in the first quarter, is forecast to drop 7.05 percent and 0.11 percent in the second and third quarters respectively but increase by 3.91 percent in the fourth quarter, the report said.
The outlook, while pessimistic, is brighter than the picture sketched by the Directorate-General of Budget, Accounting and Statistics, which predicted last month the economy would decline 4.25 percent this year.
Wu said Academia Sinica was less pessimistic because it anticipated a bigger trade surplus of NT$2.17 trillion (US$66 billion), compared with the government’s estimate of US$27.21 billion.
Wu said the global slump had stabilized and the domestic situation showed stable signs of improvement.
“The leading business cycle indicator has, since February, gained points for three months in a row,” he cited as an example.
Exports, the main driver of the economy, are forecast to drop 13.97 percent this year, while imports are estimated to weaken 17.41 percent, the report said.
Private investment, meanwhile, is expected to plunge 23.97 percent as companies halt expansion amid the recession, Wu said.
Although the government had introduced assorted stimulus measures and planned to increase investment by 18.34 percent, these are not significant enough to sustain growth, the economist said.
“In fact, the government may contribute to uncertainty if it fails to carry out assorted spending programs competently,” Wu said.
Wu said the central bank would probably leave interest rates untouched after its quarterly board meeting next week as economic activity remains weak despite ample idle funds.
Wu predicted that consumer prices would only drop 0.19 percent this year with little deflation or inflation pressure.
Academia Sinica’s GDP forecast is higher than the 4.8 percent decline predicted by Polaris Research Institute (寶華綜合經濟研究院) but lower than the 3.59 percent drop forecast by the Chung-Hua Institution for Economic Research (CIER, 中經院).
The Taiwan Institute of Economic Research (TIER, 台經院) is the lone think thank at home or abroad that maintains the nation can achieve growth of 0.11 percent this year.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
RSS