The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday lowered its forecast for Taiwan’s GDP growth this year to 1.03 percent, less than half of its previous projection of 2.34 percent, as the COVID-19 pandemic is hurting exports and consumer spending.
The Taipei-based institute lent support to the government’s belief that Taiwan would manage to grow GDP for the whole of the year, although Standard & Poor’s Global Ratings (S&P) expects the nation to see a 1.2 percent contraction.
“Economic activity is chilling on both domestic and external fronts due to global lockdowns to contain the pandemic,” CIER president Chen Shi-kuan (陳思寬) said.
A mild spread — with 395 confirmed cases so far — has enabled Taiwan to avoid instituting strict isolation measures to fight the novel coronavirus, which has brought economies in Europe, the US and other countries to a virtual standstill.
Nevertheless, the nation is not immune to reduced trade and people flows, or to a potential nosedive in business and consumer confidence, CIER economist Peng Su-ling (彭素玲) said.
The manufacturing and service industries hold bleak views about their business prospects, although exports staged a stronger performance than the government expected, thanks to robust demand for electronics used for 5G deployment and artificial intelligence, Peng said.
Taiwan is home to the world’s leading suppliers of semiconductors, the mainstay of outbound shipments, the economist said.
Taiwan Semiconductor Manufacturing Co (台積電) on Thursday told investors that demand for advanced technologies would hold strong in the coming years.
Exports might pick up 2 percent this year, while imports increase 1.4 percent, assuming that the virus shock is plateauing this month and the world would return to normalcy next quarter, Peng said.
Still, Taiwan’s economy would see a small and temporary decline of 0.12 percent in the current quarter, dragged by sluggish consumer spending and private investment, as well as cheaper wholesale and fuel prices, CIER said.
Private consumption would make a nearly zero contribution to GDP this year, it said, as the number of furloughed employees soared to 14,821 this week, the highest in eight years.
S&P was less optimistic, forecasting that economies in the region would enter a transition period when social distancing measures would be common between full lockdowns and business as usual until the middle of next year.
Job losses would be a sticky issue and much higher in the absence of government measures directly targeting the retention of jobs, the ratings agency said.
Intense uncertainty renders economic projections extremely difficult at this stage, CIER and S&P said.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by