Polaris Research Institute (寶華綜合經濟研究院) adjusted its GDP forecast for Taiwan next year to 4.57 percent yesterday, up from its previous estimate of 4.10 percent and higher than the Directorate-General of Budget, Accounting and Statistics’ (DGBAS) prediction of 4.39 percent.
The Taipei-based institute said the economy is expected to return to normal next year because the global economy is recovering and exports to China, which drive both internal and external demand, are expanding.
“The upward adjustment is a result of the lower base period, an Asian-led global economic recovery and the increasing inventory buildup,” Polaris president Liang Kuo-yuan (梁國源) told a press conference.
The institute said economic growth this year would contract by 2.47 percent from last year, compared to DGBAS’ Nov. 26 estimate of a 2.53 percent decline. Liang also shrugged off market concerns over the possibility of a double-dip recession next year.
“It is almost impossible for that to happen [a double dip] in the first half of next year, although a cautious observation is needed for the second half of the year,” he said.
Taiwan tumbled into its worst recession since 2001 in the fourth quarter of last year after the nation reported a decline of 7.11 percent in GDP following a drop of 0.80 percent in the previous quarter.
The economy has gradually come out of the recession in the second half of the year, after the GDP showed a decline of 1.29 percent in the third quarter following declines of 6.85 percent and 9.06 percent respectively in the preceding quarters.
The institute’s data showed that the inventory-output ratio continued to fall for the third consecutive quarter to 0.32, nearing the long-term average ratio of 0.31 between 2000 and this year. This indicates that inventory run-down is coming to an end as demand increases amid accelerated economic growth.
While the economic prospects next year are upbeat, Liang said there are three major risks facing the recovering global economy, namely asset bubbles, the slower-than-expected recovery in the US and EU, as well as risks regarding governments’ rapid withdrawl of economic stimulus measures.
Asked to comment on the impact of an economic pact with China, Liang said that “the inking of an ECFA [economic cooperation framework agreement] will not produce an immediate outcome for the nation’s economy next year,” adding that what the agreement will include was still uncertain.
The institute also forecast that the consumer price index (CPI) in the fourth quarter would decline 1.09 percent and that the CPI for next year will see an increase of 1.10 percent.
With the increasing prices of international products, the CPI has reported a steady change compared with the precipitous declines in the same period last year, Liang said.
In terms of the exchange rate for the New Taiwan dollar against the US dollar, the institute adjusted its forecast to NT$31.8 versus the greenback next year and retained its average estimate of NT$33.0 for this year.
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
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
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
AI: Softbank’s stake increases in Nvidia and TSMC reflect Masayoshi Son’s effort to gain a foothold in key nodes of the AI value chain, from chip design to data infrastructure Softbank Group Corp is building up stakes in Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the latest reflection of founder Masayoshi Son’s focus on the tools and hardware underpinning artificial intelligence (AI). The Japanese technology investor raised its stake in Nvidia to about US$3 billion by the end of March, up from US$1 billion in the prior quarter, regulatory filings showed. It bought about US$330 million worth of TSMC shares and US$170 million in Oracle Corp, they showed. Softbank’s signature Vision Fund has also monetized almost US$2 billion of public and private assets in the first half of this year,
RSS