The central bank is likely to maintain its policy rates as the nation is grappling with a COVID-19 outbreak that is freezing consumer activity and threatening to disrupt electronics production, global research body IHS Markit said yesterday.
The monetary policymaker is due to review interest rates, credit controls and GDP growth during its quarterly board meeting on Thursday next week.
Central bank Governor Yang Chin-long (楊金龍) earlier indicated that the nation’s export-oriented economy would remain solid as long as the outbreak does not disrupt production. Taiwan is home to the world’s largest contract chip makers, playing a critical role in the global electronics supply chain.
Photo: Ritchie B. Tongo, EPA-EFE
Exports grew at a rapid pace in the first four months of this year, bolstered by stro=ng demand for semiconductors, camera lenses, battery packs, flat panels and other components used in smartphones, laptops, TVs and wearables, IHS said.
In April, exports soared 38.7 percent year-on-year, with semiconductor exports up 34.9 percent, it said.
Electronics components, which accounted for 38.6 percent of overall exports, spiked 34 percent, as Taiwanese tech firms commanded technology leadership on the world stage, it said.
Electronics production has run into headwinds since last month due to cluster infections at chip-testing plants in Miaoli County, it said.
Chip-testing firm King Yuan Electronics Co (京元電子) had to shut down temporarily earlier this month following cluster infections among foreign workers on its factory floor. Operations resumed within a few days after using support staff.
Greatek Electronics (超豐電子), a nearby chip-testing factory, was also hit by cluster infections at its facility.
The twists have raised global concerns that other electronics firms could face similar disruptions until the outbreak can be brought under control, IHS said.
However, a positive development has been the easing of a drought due to recent rainfalls, it said.
The drought had triggered water restrictions in some areas, including a key hub for semiconductor manufacturing, it said.
The risk has abated, thanks to the onset of seasonal rains, it said.
All eyes are now focused on the meeting of the US Federal Open Market Committee on Tuesday and Wednesday next week, as global investors are anxious to learn the US Federal Reserve’s stance on quantitative tapering and inflation, IHS said.
The US consumer price index rose 5 percent year-on-year last month, the highest since 2008, as prices climbed on the back of pent-up demand and supply-chain bottlenecks, it said.
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