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.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Taiwan has enough crude oil reserves for more than 100 days and sufficient natural gas reserves for more than 11 days, both above the regulatory safety requirement, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday, adding that the government would prioritize domestic price stability as conflicts in the Middle East continue. Overall, energy supply for this month is secure, and the government is continuing efforts to ensure sufficient supply for next month, Kung told reporters after meeting with representatives from business groups at the ministry in Taipei. The ministry has been holding daily cross-ministry meetings at the Executive Yuan to ensure
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
RSS