The COVID-19 pandemic might persist for nine months, from an earlier estimate of three months, and would wipe out almost all economic gains this year in the absence of the government’s relief and stimulus measures, top statistics and monetary officials said yesterday.
The pandemic could erase GDP growth by 1.8 to 2.3 percentage points this year through disruptions to trade channels abroad and consumer spending at home, Directorate-General of Budget, Accounting and Statistics Minister Chu Tzer-ming (朱澤民) told a meeting of the legislature’s Finance Committee in Taipei.
That would leave Taiwan with a parlous growth of between 0.4 percent and 0.9 percent, without government intervention, Chu said.
Photo: CNA
The statistics agency in February set its forecast for GDP growth this year at 2.37 percent, with the pandemic expected to affect China for three months, based on the global experience with SARS in 2003.
However, the novel coronavirus last month rapidly spread to Europe, the US and other parts of the world, forcing world leaders to shut non-essential businesses and international travel, and impose social distancing before the development of a vaccine.
While uncertainties remain high, Chu said the Taiwanese economy could still grow between 1.3 and 1.8 percent this year, bolstered by government relief and stimulus packages.
A special aid fund of NT$60 billion (US$2 billion) has cleared the legislature and the Cabinet is to propose an extra NT$150 billion later this week to help companies and households weather the virus shock, Chu said.
The package would shore up GDP by 0.9 percentage points, he said.
The goal now is to maintain an economic expansion of at least 1 percent, instead of 2 percent as earlier forecast, provided the world could return to normalcy in the third quarter, Chu said.
The IMF forecast last week that Taiwan’s economy would contract 4 percent is excessively pessimistic and inconsistent with its projected unemployment rate of 4.4 percent, he said.
An economic decline of 4 percent would put far more people out of work than an increase of 70,000 to 80,000 as the IMF suggested, he added.
A central bank official agreed, saying the international research body had underestimated Taiwan’s economic might for years.
The IMF does not have a designated unit to study Taiwan’s economy, accounting for its lack of accuracy, central bank Deputy Governor Yen Tzung-ta (嚴宗大) said.
The global economy is most likely to stage a U-shaped recovery, but much hinges on when the virus could be brought under control, Yen told legislators.
The central bank can make quick responses if necessary after cutting interest rates by 25 basis points last month, Yen 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