Fitch Ratings yesterday revised upward its forecast for Taiwan’s economy, saying it might grow 1 percent this year, from an expected 0.2 percent contraction, due to fast recoveries of private consumption and exports.
The agency expects Taiwan’s economy to expand 2.8 percent next year, as the COVID-19 pandemic is expected to ease in many countries worldwide.
The revision reflects the view that private consumption and merchandise exports will improve faster than the previous baseline, Fitch said.
Taiwan’s exports expanded in the past two months, propelled by strong demand for 5G wireless equipment, remote working and learning, as well as frontloading by China’s Huawei Technologies Co (華為) ahead of a sales ban in the US starting next week, the Ministry of Finance said.
Consumer activity also gained momentum after COVID-19 was brought under control in the nation in May, allowing business in retail shops, restaurants, hotels and recreational facilities to pick up significantly, government data show.
However, the agency’s growth forecast is lower than the 1.52 percent increase projected by the Directorate-General of Budget, Accounting and Statics (DGSAS).
Taiwan’s economy is set for stronger showings in the second half, the high season for exports and consumer activity, the DGSAS said.
Despite the upward growth revision, Fitch reiterated its assessment that Taiwan’s environment for the banking sector remains negative.
This is due to downside risks from the ongoing pandemic and continued pressure on asset quality, profitability and capitalization for some players, Fitch said.
“We do not expect sustained recoveries in these areas until next year,” the agency said.
The banking sector’s impaired loan ratio might rise to 2 percent by the end of next year, from 1 percent in the first half of this year, as recognition of impaired loans would be deferred until the first quarter or later next year when COVID-19 relief measures expire, Fitch said.
As of last month, relief lending by banks, mainly to small and medium-sized enterprises, and retail customers in affected sectors, rose to 5.8 percent of system loans, the agency said.
Near-term credit losses at banks could increase due to rising impaired loans even though most of the relief loans are covered by government guarantees or collateral, Fitch added.
The banking sector’s pretax return on assets would soften to 0.5 percent next year, from 0.6 percent in the first half this year and 0.7 percent for the entire last year, the agency said.
EXPANSION: The investment came as ASE in July told investors it would accelerate capacity growth to mitigate supply issues, and would boost spending by 16 percent ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it is investing NT$17.6 billion (US$578.6 million) to build a new advanced chip packaging facility in Kaohsiung to cope with fast-growing demand from artificial intelligence (AI), high-performance-computing (HPC) and automotive applications. The new fab, called K18B, is to commence operation in the first quarter of 2028, offering chip-on-wafer-on-substrate (CoWoS) chip packaging and final testing services, ASE said in a statement. The fab is to create 2,000 new jobs upon its completion, ASE said. A wide spectrum of system-level chip packaging technologies would be available at
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
HEAVYWEIGHT: The TAIEX ended up 382.67 points, with about 280 of those points contributed by TSMC shares alone, which rose 2.56 percent to close at NT$1,400 Shares in Taiwan broke records at the end of yesterday’s session after contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) hit a fresh closing-high amid enthusiasm toward artificial intelligence (AI) development, dealers said. The TAIEX ended up 382.67 points, or 1.45 percent, at the day’s high of 26,761.06. Turnover totaled NT$463.09 billion (US$15.22 billion). “The local main board has repeatedly hit new closing highs in the past few sessions as investors continued to embrace high hopes about AI applications, taking cues from a strong showing in shares of US-based AI chip designer Nvidia Corp,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su
Handset camera lens maker Largan Precision Co (大立光) on Sunday reported a 6.71 percent year-on-year decline in revenue for the third quarter, despite revenue last month hitting the highest level in 11 months. Third-quarter revenue was NT$17.68 billion (US$581.2 million), compared with NT$18.95 billion a year earlier, the company said in a statement. The figure was in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$17.9 billion, but missed the market consensus estimate of NT$18.97 billion. The third-quarter revenue was a 51.44 percent increase from NT$11.67 billion in the second quarter, as the quarter is usually the peak
RSS