The Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday raised its forecast for GDP growth this year from 3.1 percent to 4.4 percent on the back of strong exports, but said that the showing would not be exceptional globally, giving the New Taiwan dollar little room to increase further against the US dollar.
Taiwan’s tech firms have gained importance in global electronics supply chains amid US-China trade tensions and the COVID-19 pandemic, making them major beneficiaries of the remote work and learning trends, as well as enhanced safety stock levels, Yuanta-Polaris president Liang Kuo-yuan (梁國源) said.
The phenomenon, referred to as the bullwhip effect, helps account for the unprecedented prosperity local electronics makers experienced last year and this year, Liang said.
Photo: Wu Chia-ying, Taipei Times
Exports might grow 5.16 percent this year, up from the previous forecast of 5 percent, while imports might increase 3.97 percent, down from 4.07 percent, the Taipei-based think tank forecast.
Private investment could expand 4.07 percent, while consumer spending might grow 3.73 percent, it said.
With projected GDP growth of 4.4 percent, Taiwan would rank somewhere in the middle worldwide, behind major economies such as the US and China, explaining why the NT dollar has lost some momentum against the greenback, it said.
“Global capital has ... flowed to the US market to pursue better investment opportunities,” Liang said.
Yuanta-Polaris expects the NT dollar to trade at an average of NT$28.5 this year versus the greenback. The local currency closed at NT$28.538 against the US dollar in Taipei trading yesterday.
Taiwan’s robust exports would continue to bolster its current account surpluses and countries with strong trade surpluses are unlikely to have a weak currency, Liang said.
The central bank would refrain from intervention next quarter, when the US is due to update its currency report after placing Taiwan on its watch list for currency manipulation in December last year, he said.
Taiwan meets two of the three criteria by having a trade surplus with the US of US$20 billion or more and a current account surplus in excess of 2 percent of GDP, but it can contest the criterion regarding one-sided intervention in the foreign exchange market, he said.
“Taiwan had better shake off currency manipulation charges or it might attract punitive measures from the US, the world’s largest economy,” Liang said.
While the pandemic poses the biggest uncertainty to the global economy, Taiwan should strive to solve water, land, electricity, labor and talent shortages that went unnoticed until the water shortage worsened, he said.
The government should learn from major tech firms in recycling wastewater or the problem could thwart the nation’s industrial development, he added.
WALKING AWAY: At one point the world’s No. 3 smartphone brand, LG has fallen from a position as a market leader after a series of software and hardware mishaps South Korea’s LG Electronics Inc is to wind down its loss-making mobile division after failing to find a buyer, a move that would make it the first major smartphone brand to completely withdraw from the market. Its decision to pull out will leave its 10 percent share in North America, where it is the No. 3 brand, to be gobbled up by Samsung Electronics Co and Apple Inc with its domestic rival expected to have the edge. “In the United States, LG has targeted mid-priced — if not ultra-low — models and that means Samsung, which has more mid-priced product lines than
SHORTAGE: The city government said it would install water purification machines to provide drinking water to residents and would close all public swimming pools Officials, residents and businesses in Taichung have been gearing up for water cuts that are to take effect tomorrow as Taiwan deals with a water shortage. The water supply to large parts of Taichung as well as parts of Miaoli, Changhua and Hsinchu counties is to be cut on a rotational basis for two days a week, affecting an estimated 1 million customers, the Water Resources Agency said. It is the most stringent water rationing measure introduced in central Taiwan in nearly 50 years, Taiwan Water Corp (台灣自來水) official Lin Yi-hsiung (林義雄) said. The Taichung City Government said in a statement that
SPECULATION: The integrated house and land transaction income tax has been amended as the real-estate market heats up because of high liquidity and low interest rates Lawmakers across party lines yesterday agreed to July 1 as the provisional date on which a draft amendment to the Income Tax Act (所得稅法) is to come into effect, with the aim of curbing real-estate speculation. The consensus was reached following interparty negotiations at the legislature’s Finance Committee to determine when revisions to the “integrated house and land transaction income tax” would take effect. The committee on Monday last week passed a number of revisions to the act, but failed to agree on when they would take effect. Under the proposed revisions, the tax would be set at 45 percent
TAICHUNG PLANT: An official said that generator No. 3 had been retrofitted and it generates 0.46g of particulate pollution per kilowatt-hour, down from 0.6g to 0.7g A spike in demand for electricity made it necessary to restart the third coal-fired generator at the Taichung Power Plant, Taiwan Power Co (Taipower, 台電) said yesterday as a feud with the Taichung City Government lingers. Taichung Mayor Lu Shiow-yen (盧秀燕) has sought to keep the generator from being used. In 2019, he revoked Taipower’s license to operate the generator. However, the state-run utility has taken the city government to court over the license revocation and won the case in February last year, Taipower manager Chang Ting-shu (張廷抒) said. “We would like to remind the Taichung City Government that operation of the third