DBS Bank Ltd has lowered its growth forecast for Taiwan’s economy this year to 2.9 percent from the 3.9 percent it predicted in July amid growing signs of a manufacturing downturn.
Economic indicators point to a downturn, with the manufacturing purchasing managers’ index contracting last month, export orders falling in July and industrial production growing at a slower pace in July, DBS Bank senior economist Ma Tieying (馬鐵英) said in a report released yesterday.
The Singapore-based bank is the first financial services company to cut Taiwan’s forecast GDP growth to below 3 percent.
Photo: Ann Wang, Reuters
Warning: Smoking can damage your health
Although Taiwanese exports surged 14 percent annually in July, the momentum would slow over the next three months, as exports are correlated with export orders and industrial production, Ma said.
Exports would remain in positive territory, but growth would be milder, likely by a single-digit rate, she said.
Demand for Taiwanese electronic components, as well as information and communications technology products, lost steam in July because of the deterioration in global economies, lower consumer disposable income amid surging inflation and rising interest rates, Ma said.
Although the ongoing technology downturn is a typical and cyclical adjustment, it would be a drag on Taiwan’s economy, Ma said, adding that the inventory-to-shipment ratio of Taiwan’s electronic components sector is close to the level in early 2019, when destocking took about two to three quarters.
Destocking is likely to continue until the end of June next year, she said, adding that leading chip companies such as Taiwan Semiconductor Manufacturing Co (台積電) and Vanguard International Semiconductor Corp (世界先進) are on the same page.
DBS Bank also lowered its forecast for Taiwan’s GDP growth next year to 2.3 percent, from 2.8 percent.
On a quarterly basis, Taiwan’s GDP could shrink at most by 1 percent year-on-year in the fourth quarter of this year or first quarter of next year, before returning to positive territory in the following quarters, Ma said.
However, the bank believes that Taiwan’s economy could avoid a contraction, with consumption and the services sectors likely providing a cushion to offset the decline in exports, Ma said.
With the US Federal Reserve expected to continue raising interest rates, Taiwan’s central bank is forecast to hike its rate by 12.5 basis points each this month and in December to rein in inflation, Ma said.
DBS does not expect the central bank to raise interest rates further next year as it shifts to a more a balanced policy stance after seeing an easing in domestic inflation, she said.
Taiwanese firms have increased investment in the Philippines in recent years as Manila’s ties with Washington deepen and global supply chains continue to shift away from China, an expert at the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The Philippines had not been among Taiwanese investors’ top choices in Southeast Asia, CIER Taiwan ASEAN Studies Center director Kristy Hsu (徐遵慈) said at a seminar in Taipei. However, Taiwan’s investment in the country has grown significantly since the COVID-19 pandemic, reaching US $257 million last year, a high in recent years, she said. Although Taiwan’s total investment in the Philippines still lags
Intel Corp regards Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) as a longstanding partner, as the US chipmaker would continue outsourcing production of advanced chips to TSMC, Intel chief executive officer Lip-Bu Tan (陳立武) said yesterday. “I don’t look at people as competitors. I look at the collaboration... Nvidia is also, you know, a good friend,” Tan told a news conference following his keynote speech at the Computex trade show in Taipei. “It’s a very trusted partnership for us... We are a big, top customer for them, and we’re going to continue doing that,” he said, referring to TSMC, the world’s largest foundry
Hon Hai Precision Industry Co (鴻海精密) yesterday said it would work with US chipmaker Intel Corp to jointly develop and deploy next-generation artificial intelligence (AI) infrastructure and intelligent computing platforms in a move to capture booming demand for AI computing systems. Hon Hai, also known as Foxconn Technology Group (富士康), said in a statement that the partnership would combine its global manufacturing scale, system integration expertise and AI data center deployment capabilities with Intel’s strengths in processor architecture, silicon technologies and software ecosystem. The companies said they plan to work on equipment used in AI data centers, including server racks powered by
Artificial intelligence (AI) agents would supplant smartphones as the center of people’s digital lives, fundamentally reshaping personal devices and driving a major computing upgrade cycle, Qualcomm Inc CEO Cristiano Amon said yesterday. In his keynote speech for this year’s Computex trade show in Taipei, Amon said that the rise of "agentic AI" — AI systems capable of reasoning, planning and carrying out tasks autonomously — would transform how people interact with technology across phones, PCs, vehicles and wearable devices. Describing the technology as the next major evolution in computing, Amon said that "2026 is the year of agents.” For decades, smartphones have sat
RSS