The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday trimmed its forecast for Taiwan’s GDP growth this year from 3.81 percent to 3.45 percent and expected the pace to slow further to 2.91 percent next year, as global economic headwinds gain force.
Exports and private investment would weaken, leaving domestic demand to drive growth single-handedly, the Taipei-based think tank said.
The war in Ukraine and China’s draconian COVID-19 restrictions derailed global economic recovery this year, and fears of recession next year are developing amid drastic monetary tightening by major central banks aiming to tame inflation, TIER said.
Photo: CNA
“It would take great effort by supply chains to digest excessive inventory, so local firms had better brace for tough times that may prove longer than expected,” TIER president Chang Chien-yi (張建一) told a news conference.
The world could see low growth or recessions in the next two to four years, boding ill for Taiwan’s exports, Chang said.
High inflation in the US means that the world’s largest consumer of electronic gadgets would cut budgets for luxury items, notebook computers and smartphones, which would be unfavorable for local suppliers including mature chipmakers, he said.
FocalTech Systems Co (敦泰電子), a local supplier of touch screen integrated circuits used in flat panels, yesterday said it would shrink its payroll by 10 to 13 percent after incurring NT$2.5 billion (US$78.36 million) in inventory losses last quarter, equal to losses of NT$13.57 per share.
Flat-panel exports last month plunged 42 percent from a year earlier due to inventory adjustments and sluggish demand, government data showed.
US technology giants Tesla Inc, Twitter Inc and Facebook owner Meta Platforms Inc have announced massive layoffs to cope with poor business.
TIER expects exports to expand a modest 2.35 percent next year, from an estimated 9.86 percent increase this year, its report said.
Imports would slump from a 13.21 percent expansion this year to a mild 1.79 percent uptick, as international energy and raw material prices could fall amid tepid demand.
Private investment, a main driver of growth in recent years, would retreat from a 5.87 percent gain this year to a 2.83 percent rise next year, TIER said.
Major technology firms including Taiwan Semiconductor Manufacturing Co (台積電), the world’s top chipmaker, have cut or postponed capital expenditures due to order cancelations and concerns that inventory adjustments would persist through the first half of next year.
TIER Macroeconomic Forecasting Center director Gordon Sun (孫明德) said the US consumer prices last month grew 7.7 percent, still very high despite being milder than expected.
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