The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for GDP growth this year to 3.56 percent from the 3.5 percent it forecast in December last year, based on expectations that cheaper fuel costs would offset a slowdown in exports.
“We are slightly more optimistic about the economy going forward, because, despite weaker exports, private consumption and investment should fare better, thanks to cheaper fuel costs,” CIER president Wu Chung-shu (吳中書) said at a press conference in Taipei.
In addition, it is important to factor in lower inflation when reading major economic data, Wu said.
Exports contracted 4.2 percent in the first quarter annually, dragged by soft sales of mineral, chemical and plastic products, the Ministry of Finance said last week.
Disappointing exports had little impact on GDP growth, because it is net exports — exports minus imports — that drives GDP growth.
In the January-to-March quarter, imports fell by 15 percent year-on-year, leaving a trade surplus of US$13.42 billion, more than double the amount recorded in the same period last year, ministry data showed.
Fuel cost savings could mean consumers and companies have more money to spend on other products, the CIER said, predicting private consumption would expand by 3.02 percent and domestic investment by 4.37 percent this year, up from its previous estimates of 2.78 percent and 3.27 percent respectively.
Cheaper oil prices would also mean lower inflation, with the consumer price index projected to ease an average of 0.37 percent this year, down from 1.2 percent last year, the CIER said.
The wholesale price index — the gauge of production costs — is forecast to decline 4.56 percent this year, widening from a 0.57 percent contraction last year, as imports become cheaper, the institute said.
Wu voiced caution over listless imports — that are seen as an indicator of investment interest — because most manufacturers buy capital equipment from abroad to increase capacity.
The nation’s semiconductor companies, the main driver for robust electronics exports, saw overseas shipments grow by a modest 5.3 percent last month from the same period a year earlier.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday trimmed its capital expenditure for this year on cautious market sentiment.
Taiwan’s overall exports are set to grow 6.26 percent and imports 5.58 percent this year, the CIER predicted, lower than forecasts made in December last year of 7.35 percent and 6.36 percent respectively.
The job market would continue to improve this year with jobless rates averaged at 3.72 percent, from 3.96 percent last year, the institute said.
The CIER expects the New Taiwan dollar to weaken this year — trading at an average of NT$31.18 against the US dollar, from NT$30.37 last year — as the greenback holds firm amid expectations of an interest rate hike in the second half.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
Popular vape brands such as Geek Bar might get more expensive in the US — if you can find them at all. Shipments of vapes from China to the US ground to a near halt last month from a year ago, official data showed, hit by US President Donald Trump’s tariffs and a crackdown on unauthorized e-cigarettes in the world’s biggest market for smoking alternatives. That includes Geek Bar, a brand of flavored vapes that is not authorized to sell in the US, but which had been widely available due to porous import controls. One retailer, who asked not to be named, because
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS