Taiwan’s economy is likely to remain healthy this year on solid exports led by consumer electronics shipments, while private consumption will improve further, economists said yesterday.
The Directorate-General of Accounting, Budget and Statistics (DGBAS), due to release preliminary fourth-quarter economic data and revise its GDP growth forecast for this year today, will probably make modest upward adjustments, the economists said.
Starting this year, the agency will unveil the latest economic data one month after the previous quarter ends, following the example of the US, Singapore and South Korea.
Cheng Cheng-mount (鄭貞茂), head economist at Citigroup Taiwan, said he expects GDP growth to remain unchanged at 4.3 percent this year from his previous estimate. The economy was estimated to grow by 10.4 percent last year, up from the 10 percent he predicted early last month, he said.
“The lack of revision [for this year] is positive given the higher base last year,” Cheng said by telephone.
Cheng forecasts the economy to have expanded 6.3 percent in the fourth quarter, compared with 6 percent estimated last month, driven by stronger exports, private investment and consumer spending.
For the whole of last year, Taiwan’s exports expanded 34.8 percent year-on-year to a record US$274.6 billion, the Ministry of Finance said last month, higher than the DGBAS’ 33.88 percent growth forecast to US$272.67 billion made in November.
Meanwhile, imports increased 44.2 percent year-on-year to US$251.4 billion last year, also beating the agency’s estimate of 42.24 percent at US$248.03 billion.
The figures indicated -stronger-than-expected trade activity between Taiwan and major trade partners, especially China, which accounted for 40 percent of outward shipments, Cheng said.
DGBAS last predicted the economy would grow 9.98 percent last year with the fourth-quarter GDP to pick up 4.7 percent from its level a year earlier.
Polaris Research Institute (寶華研究院) president Liang Kuo-yuan (梁國源) said there wasn’t much room for DGBAS to raise the forecast, given the high base of comparison and the ongoing efforts around the world to rein in fiscal debts.
“GDP growth is likely to hover around 4.5 percent this year,” -Liang said by telephone.
The Council for Economic Planning and Development had set the GDP growth target at 4.82 percent for this year.
Liang said global demand for consumer electronics proved stronger than expected last year and he attributed the trend to new-generation products and replacement demand previously delayed by the global financial crisis.
Looking forward, he said exchange rate volatility and austerity measures in the US, Europe and Japan would continue to introduce uncertainty to the economic landscape at home and abroad.
“If left unchecked, the appreciation in the New Taiwan dollar will further squeeze the profitability of major technology firms, as evidenced last quarter,” Liang said.
The economist expects the central bank to allow a bit more gain in the NT dollar in the first half of the year to help absorb imported inflationary pressure, but believed the central bank would prevent the NT dollar from rising above NT$28.5 against the US dollar.
“Exporters will suffer otherwise,” he said.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such