Taiwan’s economic growth next year could decelerate to 2.4 percent from an estimated 2.7 percent this year, as companies that feed into China’s global supply chain feel the chilling effect of US-China tariff hikes, Fitch Ratings said on Tuesday.
The nation’s growth momentum looks set to lose some steam as the external environment turns less favorable and global growth becomes less balanced and synchronized, the international ratings agency said in a report.
Taiwan is potentially one of the most exposed economies to escalating US-China trade tensions, because more than 40 percent of its exports go to China and Hong Kong, Fitch said.
The agency acknowledged that US tariffs on US$250 billion of imports from China have yet to target major consumer electronics and such tariffs could create trade diversion opportunities for Taiwanese firms.
“Nevertheless, the net impact will be negative in light of Taiwan’s role as a major supplier of intermediate goods and its significant trade flows with China,” Fitch said in the report.
A more harmful downside risk to the growth outlook could materialize should US-China trade tensions escalate to a stage that leads to the imposition of US tariffs on all imports from China — estimated at US$280 billion, it said.
This would have a direct spillover on Taiwan’s semiconductor industry and other producers that feed into the global consumer electronics supply chain, Fitch said.
Moody’s Investors Service voiced similar concerns, saying that a prolonged US-China trade dispute and rising geopolitical tensions are now more likely.
“We expect further US-China trade and investment restrictions this year and beyond and trade disputes will create headwinds for global growth,” Moody’s said in a separate report yesterday.
Moody’s said its baseline scenario assumes a manageable impact on global growth and inflation, but a large hit to investment or financial markets would have the potential to derail the global economy.
Concrete sector and regional impacts are likely, including unintended consequences for domestic supply chains, it said, adding that industries that use more expensive imported inputs would be hurt.
Moving production chains would be costly and rising uncertainty would affect investment, it said.
The disruption would be higher in Asia than elsewhere given the region’s integration in global supply chains, Moody’s projected.
Still, Fitch kept Taiwan’s long-term foreign-currency issuer default rating unchanged at “AA-” with a stable outlook.
The affirmation reflects the nation’s robust external finances, strong macroeconomic policy framework, competitive business environment and high governance standards, Fitch said.
External finances are among the strongest across rated sovereigns and are unlikely to be impaired by the ongoing US-China trade conflict, Fitch said.
Taiwan has run a current-
account surplus for more than 30 years and is a large net external creditor, it said.
Anna Bhobho, a 31-year-old housewife from rural Zimbabwe, was once a silent observer in her home, excluded from financial and family decisionmaking in the deeply patriarchal society. Today, she is a driver of change in her village, thanks to an electric tricycle she owns. In many parts of rural sub-Saharan Africa, women have long been excluded from mainstream economic activities such as operating public transportation. However, three-wheelers powered by green energy are reversing that trend, offering financial opportunities and a newfound sense of importance. “My husband now looks up to me to take care of a large chunk of expenses,
SECTOR LEADER: TSMC can increase capacity by as much as 20 percent or more in the advanced node part of the foundry market by 2030, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to lead its peers in the advanced 2-nanometer process technology, despite competition from Samsung Electronics Co and Intel Corp, TrendForce Corp analyst Joanne Chiao (喬安) said. TSMC’s sophisticated products and its large production scale are expected to allow the company to continue dominating the global 2-nanometer process market this year, Chiao said. The world’s largest contract chipmaker is scheduled to begin mass production of chips made on the 2-nanometer process in its Hsinchu fab in the second half of this year. It would also hold a ceremony on Monday next week to
State-run CPC Corp, Taiwan (CPC, 台灣中油) yesterday signed a letter of intent with Alaska Gasline Development Corp (AGDC), expressing an interest to buy liquefied natural gas (LNG) and invest in the latter’s Alaska LNG project, the Ministry of Economic Affairs said in a statement. Under the agreement, CPC is to participate in the project’s upstream gas investment to secure stable energy resources for Taiwan, the ministry said. The Alaska LNG project is jointly promoted by AGDC and major developer Glenfarne Group LLC, as Alaska plans to export up to 20 million tonnes of LNG annually from 2031. It involves constructing an 1,290km
TECH CLUSTER: The US company’s new office is in the Shalun Smart Green Energy Science City, a new AI industry base and cybersecurity hub in southern Taiwan US chip designer Advanced Micro Devices Inc (AMD) yesterday launched an office in Tainan’s Gueiren District (歸仁), marking a significant milestone in the development of southern Taiwan’s artificial intelligence (AI) industry, the Tainan City Government said in a statement. AMD Taiwan general manager Vincent Chern (陳民皓) presided over the opening ceremony for the company’s new office at the Shalun Smart Green Energy Science City (沙崙智慧綠能科學城), a new AI industry base and cybersecurity hub in southern Taiwan. Facilities in the new office include an information processing center, and a research and development (R&D) center, the Tainan Economic Development Bureau said. The Ministry
RSS