The EU should be ready to withdraw financial support from countries such as Greece if the conditions attached to bailouts aren’t met and such terms should be part of any permanent aid facility, the Organisation for Economic Co-operation and Development (OECD) said yesterday.
“A credible mechanism for fiscal crisis management is required,” the OECD said in one of its regular regional economic surveys. “This should involve a permanent -liquidity-support mechanism subject to strong conditionality. If conditionality is not fulfilled, financing support should be withdrawn.”
The comments underline the stakes for EU leaders as they prepare to gather in Brussels this week to hash out a permanent crisis-resolution mechanism to replace the 440 billion euro (US$580 billion) stability fund created in May in an attempt to halt the spread of the region’s sovereign-debt woes. The current mechanism is scheduled to expire in 2013.
The Paris-based OECD, which provides policy advice for its 33 member governments, warned that the reduction of economic imbalances with the 16-nation euro region will be a “difficult and prolonged process in some deficit countries.”
Wage cuts may be necessary to return economies to sustainable growth, it said.
“Falls in wages and prices cannot be ruled out and in some cases may prove inevitable,” the OECD report said. “Structural policies have a key role in rebalancing economies. In deficit countries, reforms can boost productivity and help bring costs back in line. In surplus countries, structural changes could strengthen domestic demand.”
The European Central Bank’s exceptional liquidity measures to aid banks helped ease tensions in financial markets following the onset of the economic crisis and ensured smooth functioning of monetary policy, the OECD said. Still, the Frankfurt-based central bank must give careful consideration to asset prices and monetary growth, it said.
“Consideration should continue to be given to factors that may present risks at medium to long-term horizons, such as asset prices and balance-sheet growth,” the OECD said. “It is essential that monetary analysis continue to be enhanced in order to be effectively and systematically incorporated into the policy process.”
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS