Taiwan’s business climate monitor last month signaled green for a third consecutive month, indicating steady growth, after global inflation and China’s COVID-19 controls had weighed on earlier readings, the National Development Council said yesterday.
The total score of nine constituent readings held steady at 28.
However, challenges loom ahead for exports, which have fared well so far, council research director Wu Ming-huei (吳明蕙) said.
Photo courtesy of the National Development Council
The council uses a five-color system to depict the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a shift to a stronger or weaker state.
Exports account for 60 to 70 percent of the nation’s GDP, as Taiwan is home to the world’s largest suppliers of chips used in smartphones, laptops, autos, and high-performance computing and Internet of Things applications.
Critical economic barometers such as exports, industrial production and export orders have shown signs of a slowdown, but remain in expansion territory, Wu said.
China’s virus controls have disrupted supply chain flows while the Ukraine war has been pushing up international energy and raw material prices — incidents over which Taiwanese firms do not have any control, he said.
Rising inflationary pressures worldwide have taken a toll on global demand for smartphones, laptops, TVs and vehicles.
Domestic demand, on the other hand, might soon come out of the woods, as local semiconductor companies press ahead with capacity expansion plans, which would shore up private investment, Wu said.
The government’s travel subsidies are to take effect next month, by which time the number of locally transmitted COVID-19 cases is expected to have fallen significantly, allowing business activity to recover, he said.
The index of leading indicators, which seeks to project the economic scene in the coming six months, fell 0.7 percent to 99.03, the council said, as almost all sub-indices fell, with the exception of the reading on new construction floor spaces.
The index of coincident indicators, which reflects the current economic situation, shrank 0.56 percent to 100.64, dragged by almost all components except for the gauge on exports, it said.
The gauge on retail sales last month rose from a year earlier, because the government did not tighten social distancing measures this year, as it seeks to live with COVID-19, similar to other countries, Wu said.
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months
SMART MANUFACTURING: The company aims to have its production close to the market end, but attracting investment is still a challenge, the firm’s president said Delta Electronics Inc (台達電) yesterday said its long-term global production plan would stay unchanged amid geopolitical and tariff policy uncertainties, citing its diversified global deployment. With operations in Taiwan, Thailand, China, India, Europe and the US, Delta follows a “produce at the market end” strategy and bases its production on customer demand, with major site plans unchanged, Delta president Simon Chang (張訓海) said on the sidelines of a company event yesterday. Thailand would remain Delta’s second headquarters, as stated in its first-quarter earnings conference, with its plant there adopting a full smart manufacturing system, Chang said. Thailand is the firm’s second-largest overseas
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) market value closed above US$1 trillion for the first time in Taipei last week, with a raised sales forecast driven by robust artificial intelligence (AI) demand. TSMC saw its Taiwanese shares climb to a record high on Friday, a near 50 percent rise from an April low. That has made it the first Asian stock worth more than US$1 trillion, since PetroChina Co (中國石油天然氣) briefly reached the milestone in 2007. As investors turned calm after their aggressive buying on Friday, amid optimism over the chipmaker’s business outlook, TSMC lost 0.43 percent to close at NT$1,150
RSS