The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday revised up its forecast for Taiwan’s GDP growth this year from 3.38 percent to 3.81 percent on stronger-than-expected exports, propelled by growing global demand for artificial intelligence (AI) applications.
Exports, which account for 60 percent of the nation’s GDP, are gathering momentum after expanding 12.89 percent and 9.9 percent in the first and second quarters this year, thanks to aggressive spending by US technology giants on AI infrastructure and solutions, CIER acting president Wang Jiann-chyuan (王健全) said.
“The economic pickup is clear and evident, judging by healthy data on exports, export orders and purchasing managers’ index,” the economist said, adding that all indicators have climbed to expansion territory.
Photo: Tu Chien-rong, Taipei Times
The landscape looks brighter for the rest of this year with the high sales season for technology products arriving and inventory adjustments running to an end, Wang said.
Smartphone and notebook computer brands usually launch their newest-generation gadgets in September to spur replacement demand, thus ramping up business for Taiwanese firms in their supply chains.
Exports are expected to grow 5.24 percent this quarter and 6.05 percent next quarter, slowing on a year-on-year basis as the low base effect tapers off, the economist said.
“The recovery in exports would be more solid if regular orders far outnumber short and rush orders as well as extend to more sectors,” Wang said.
Non-technology sectors are bottoming out, but greater market demand is desired as competition from abroad sharpens, he said.
The overall pattern of recovery is relatively balanced, with support from external and domestic demand,” Wang said.
Private consumption would increase 2.95 percent this year, on top of the rapid 8.19 percent growth in private consumption last year, CIER said, adding that stock rallies at home and abroad would help boost private finances and encourage spending.
Private investment, a drag on growth last year with an 11.21 percent decline, might register a 0.43 percent rebound, as firms’ interest in capital equipment acquisition and capacity expansions increases, it said.
The Taipei-based think tank is looking at 2.16 percent inflation, which would still remain above the central bank’s 2 percent target, while mitigating from 2.49 percent last year.
Wang said the US Federal Reserve is likely to cut interest rates in September and beyond, as US GDP growth and labor market conditions show signs of softening.
This would be favorable for the New Taiwan dollar, which shed another NT$0.125 yesterday to the lowest level since May 2016, according to the central bank’s data.
The retreat had to do with keen capital outflows after former US president and Republic Party presidential candidate Donald Trump voiced plans to raise tariffs on Taiwanese goods if elected in November, Wang said.
Likewise, the TAIEX lost 4.38 percent this week, as investors dumped tech shares.
Wang said Taiwan is a global technology leader because US firms prefer to focus on high-margin fab designs and outsource low-margin fab manufacturing businesses.
It is better to take a wait-and-see approach on whether Trump means what he says on the campaign trail, the economist said.
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
TikTok abounds with viral videos accusing prestigious brands of secretly manufacturing luxury goods in China so they can be sold at cut prices. However, while these “revelations” are spurious, behind them lurks a well-oiled machine for selling counterfeit goods that is making the most of the confusion surrounding trade tariffs. Chinese content creators who portray themselves as workers or subcontractors in the luxury goods business claim that Beijing has lifted confidentiality clauses on local subcontractors as a way to respond to the huge hike in customs duties imposed on China by US President Donald Trump. They say this Chinese decision, of which Agence
RSS