Cathay Financial Holding Co (國泰金控) yesterday raised its GDP growth forecast for Taiwan to 6.1 percent for this year and 3.9 percent for next year, citing a recovery in private consumption and continued growth in exports.
In September, the firm forecast growth of 5.6 percent for this year and 3.5 percent for next year.
Although the uncertainty of the COVID-19 pandemic persists, domestic consumption has significantly recovered in the fourth quarter, alleviating most economists’ main concerns regarding the local economy this year, said National Central University economics professor Hsu Chih-chiang (徐之強), who heads a research team commissioned by Cathay Financial.
Photo: Allen Wu, Taipei Times
Retail sales rebounded to NT$373 billion (US$13.46 billion) in October and NT$375.4 billion last month, following five consecutive months of annual decline due to the implementation of a level 3 COVID-19 alert starting in May, Ministry of Economic Affairs data showed.
Despite power rationing in China and a slowing economy in the US, the nation’s exports in the fourth quarter continued to increase by a double-digit percentage thanks to robust demand for technology products amid a digitalization trend, Cathay Financial said.
Since June, exports have hit record highs, with total outbound shipments in the first 11 months of the year advancing 30 percent to US$405.7 billion from a year earlier, Ministry of Finance data showed.
“Next year, we expect domestic consumption to be the driver of economic growth. Exports are expected to keep their growth momentum, but are likely to grow at a slower pace due to this year’s high comparison base,” Hsu said.
Cathay Financial forecast that Taiwan’s economy would expand 3 percent in the first half of next year and 5 percent in the second half, he added.
Next year, the central bank is likely to raise interest rates, given that the US Federal Reserve plans to do so in June at the earliest and considering the rise in inflation, Hsu said.
“It has been 10 years since the last time that the central bank raised its rates, and according to the rule of thumb, it usually hikes rates at a slower pace than when it lowers rates,” he added.
The central bank is likely to raise rates multiple times by 12.5 basis points each time, unless inflation becomes more severe, he said.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai