Cathay Financial Holding Co (國泰金控) yesterday cut its forecast for Taiwan’s GDP growth to 2 percent this year, from its previous estimate of 2.3 percent, as the COVID-19 pandemic weighs on private consumption and disrupts supply chains across Asia.
“The downward revision would be worse had the government not prepared a special relief budget of NT$60 billion [US$1.98 billion] to aid affected sectors or announced a grace period for tax payments,” Cathay Financial economist Hsu Chih-chiang (徐之強) told a news conference in Taipei.
If the pandemic is contained by summer, the economy is expected to stage a “U-shaped rebound” after hitting the bottom in the first quarter with a quarter-on-quarter decline of 0.81 percent, Hsu said.
The economy would then slowly pick up in the second quarter with a quarterly gain of 0.11 percent, he said.
Cathay Financial’s forecast differed from that of the Directorate-General of Budget, Accounting and Statistics (DGBAS), which predicted a quarterly decline of 1.81 percent in the first quarter followed by a gain of 1.2 percent in the second quarter.
“The DGBAS forecast a V-shaped rebound in the local economy, but we think the effects of COVID-19 would still linger next quarter given a spike in the number of confirmed cases outside Asia,” Hsu said.
On an annual basis, the nation’s GDP is projected to rise only 1 percent in the first half of this year followed by an increase of 3 percent in the second half, likely enabled by resumed consumption, investment and launches of new mobile or electronic devices, he said.
As the outbreak curbs international travel, private consumption is forecast to grow 1.66 percent, down from the 2.01 percent the research team predicted three months ago.
However, investment is expected to advance 3.2 percent annually, up from the estimated 2.72 percent a quarter earlier, as the viral crisis might hasten the return of some Taiwanese companies’ operations from China, it said.
While research agency IHS Markit Ltd cut its prediction for the economy to 1 percent, Hsu said that “so far, we do not agree with this expectation, as Taiwan’s exports rose in the first two months and big companies such as Taiwan Semiconductor Manufacturing Co (台積電) still saw their revenue expand,” Hsu said.
“However, 1 percent GDP growth would be possible if the spread of virus persists,” he said.
Cathay Financial forecast that the central bank would this week lower benchmark rates by 12.5 basis points to ease the outbreak’s effects on the economy, which is more conservative than CTBC Financial Holding Co’s (中信金控) prediction of a cut of 25 basis points.
“The benchmark rate stands at 1.375 percent, exactly 12.5 basis points higher than their record low of 1.25 percent in the financial crisis in 2008.” Hsu said.
“The central bank is not likely to lower the rate to a level lower than that in 2008, as the economic situation is still better now,” he said.
“It does not make sense that the central bank must join its global peers on rate cuts, given that it did not raise rates in the past two years when most central banks did,” Cathay Financial chief investment officer Sophia Cheng (程淑芬) said.
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
PARTNERSHIPS: TSMC said it has been working with multiple memorychip makers for more than two years to provide a full spectrum of solutions to address AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it has been collaborating with multiple memorychip makers in high-bandwidth memory (HBM) used in artificial intelligence (AI) applications for more than two years, refuting South Korean media report's about an unprecedented partnership with Samsung Electronics Co. As Samsung is competing with TSMC for a bigger foundry business, any cooperation between the two technology heavyweights would catch the eyes of investors and experts in the semiconductor industry. “We have been working with memory partners, including Micron, Samsung Memory and SK Hynix, on HBM solutions for more than two years, aiming to advance 3D integrated circuit
Vanguard International Semiconductor Corp (世界先進) and Episil Technologies Inc (漢磊) yesterday announced plans to jointly build an 8-inch fab to produce silicon carbide (SiC) chips through an equity acquisition deal. SiC chips offer higher efficiency and lower energy loss than pure silicon chips, and they are able to operate at higher temperatures. They have become crucial to the development of electric vehicles, artificial intelligence data centers, green energy storage and industrial devices. Vanguard, a contract chipmaker focused on making power management chips and driver ICs for displays, is to acquire a 13 percent stake in Episil for NT$2.48 billion (US$77.1 million).
RSS