The Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday cut its forecast for Taiwan’s GDP growth this year from 2.3 percent to 1.5 percent as the COVID-19 pandemic deals a blow to the global economy with no signs of easing anytime soon.
“The damage caused by COVID-19 is evolving beyond the depths of existing economic models, because health experts around the world do not have a full grasp of the disease yet,” said Liang Kuo-yuan (梁國源), the Taipei-based think tank’s president.
Research institutes at home and abroad are comparing the pandemic to the SARS outbreak of 2003 or the global financial crisis of 2008, but there is no guarantee that the analogies are valid or sound, Liang said.
Photo: Wu Chia-ying, Taipei Times
However, the one thing that is certain is that the virus is quickly sweeping from Asia to Europe, the US and other parts of the world, dimming global trade outlook and chilling consumer activity, he said.
The pandemic encompasses all of Taiwan’s export markets and there is no doubt that exports would take a hit beyond the earlier concerns caused by supply chain disruptions in China, he added.
Diminished market demand has become a reality following travel restrictions and business shutdowns around the world, and a recovery is evasive until the third quarter of this year or beyond, Liang said.
A protracted outbreak would suggest massive business closures and unemployment, he added.
“The chance of a V-shape recovery is as low as a full-blown recession for the time being,” he said, adding that the world is treading a tightrope and the outcome hinges on how fast it can contain the virus.
The think tank’s forecast is lower than the central bank’s 1.98 percent projection last week and the 2.3 percent growth the Directorate-General of Budget, Accounting and Statistics predicted last month.
However, the latter’s forecast came before the virus had spread to Europe and the US, Liang said.
Government expenditure is the only GDP component that would gain momentum amid efforts to shore up struggling companies, he said.
Private investment would hold resilient as firms continue to move production away from China and balance investment risks, he added.
Exports this year are now expected to increase only 1.27 percent, while imports might grow mildly at 1.3 percent, the institute said.
Private consumption might squeeze out a 1.04 percent increase as people cut spending, while the government seeks to lend support, it said.
The decline in oil prices is the only favorable development, which would allow Taiwan to post trade surpluses, Liang said.
The New Taiwan dollar might trade at an average of NT$30.36 against the greenback as the central bank maneuvers to support exports while seeking to avert currency manipulation charges by the US, Liang said.
Taiwan’s long-term economic competitiveness will hinge not only on national champions like Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) but also on the widespread adoption of artificial intelligence (AI) and other emerging technologies, a US-based scholar has said. At a lecture in Taipei on Tuesday, Jeffrey Ding, assistant professor of political science at the George Washington University and author of "Technology and the Rise of Great Powers," argued that historical experience shows that general-purpose technologies (GPTs) — such as electricity, computers and now AI — shape long-term economic advantages through their diffusion across the broader economy. "What really matters is not who pioneers
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
TAIWAN VALUE CHAIN: Foxtron is to fully own Luxgen following the transaction and it plans to launch a new electric model, the Foxtron Bria, in Taiwan next year Yulon Motor Co (裕隆汽車) yesterday said that its board of directors approved the disposal of its electric vehicle (EV) unit, Luxgen Motor Co (納智捷汽車), to Foxtron Vehicle Technologies Co (鴻華先進) for NT$787.6 million (US$24.98 million). Foxtron, a half-half joint venture between Yulon affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai Precision Industry Co (鴻海精密), expects to wrap up the deal in the first quarter of next year. Foxtron would fully own Luxgen following the transaction, including five car distributing companies, outlets and all employees. The deal is subject to the approval of the Fair Trade Commission, Foxtron said. “Foxtron will be
INFLATION CONSIDERATION: The BOJ governor said that it would ‘keep making appropriate decisions’ and would adjust depending on the economy and prices The Bank of Japan (BOJ) yesterday raised its benchmark interest rate to the highest in 30 years and said more increases are in the pipeline if conditions allow, in a sign of growing conviction that it can attain the stable inflation target it has pursued for more than a decade. Bank of Japan Governor Kazuo Ueda’s policy board increased the rate by 0.2 percentage points to 0.75 percent, in a unanimous decision, the bank said in a statement. The central bank cited the rising likelihood of its economic outlook being realized. The rate change was expected by all 50 economists surveyed by Bloomberg. The
RSS