The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year to 1.77 percent, from a previous estimate of 1.03 percent, as private consumption might stage a comeback fueled by the government’s Triple Stimulus Vouchers.
It is the first upgrade to Taiwan’s GDP growth forecast since COVID-19 broke out in late January, prompting research institutes at home and abroad to cut projections, citing concerns over tepid consumer spending and exports.
The latest forecast suggests a 72 percent increase from three months earlier, backed by a V-shaped recovery in tourism, despite the continued absence of foreign tourists and business travelers.
Photo: Chang Ching-ya, Taipei Times
“The stimulus vouchers of NT$3,000 per person might boost GDP growth by 0.44 percentage points,” meaning the institute would have to raise the growth rate anyhow, CIER president Chang Chuang-chang (張傳章) said.
Taiwan’s quick control of the virus outbreak has enabled people to lead a normal life with minimal social distancing requirements, the economist said.
Private consumption, which fell 1.58 percent in the first quarter and likely shrank 0.38 percent last quarter, might finish the year with a 0.87 percent increase, Chang said.
The pickup could increase to 1.33 percent if the vouchers help compound the wealth effect, he said.
The absence of lockdowns in Taiwan allows local companies, especially electronics suppliers, to benefit from order transfers and reap a boom in demand for devices used in remote working and learning arrangements.
Demand for laptops, data centers, servers and TVs remains strong this quarter, as confirmed cases escalate in many parts of the world, Taiwanese firms said, adding that unabated 5G spending also lends support to their business.
Taipei-based CIER said that overall exports would take a hit amid global economic downturns, but external demand might still make positive contributions due to a faster decline in imports.
Travel deficits might also taper off this year, as Taiwanese outspend foreign tourists on overseas vacations, government data showed.
Private investment, a main growth driver last year, might increase 0.25 percent this year, as firms turn cautious about expansion amid uncertainty, CIER said.
The government has stepped up investment and expenditure to bail out stressed companies and strengthen infrastructure, it said.
The institute expects unemployment to hover above 4 percent last quarter and this quarter due to the influx of new college graduates, and expects it to ease to 3.97 percent next quarter as the economy improves.
The New Taiwan dollar might trade at an average of NT$30.11 against the greenback this year, appreciating 2.66 percent from last year, as the US economy flounders, it said.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
RSS