Taiwan’s economy might grow 3.8 percent this year amid robust external demand, but might only gain 1.7 percent next year, as key export drivers such as chips are losing steam, Moody’s Analytics said yesterday.
The Asia-Pacific region, including Taiwan, is outpacing most of the world’s economies with regional GDP growth expected to average 3.9 percent this year and 4 percent next year, faster than expected global GDP growth of 2.6 percent and 2.7 percent respectively, the research body said.
However, economic conditions within the region vary widely, it said.
Photo: Ritchie B. Tongo, EPA-EFE
Taiwan has enjoyed robust growth in exports thanks to the rise of artificial intelligence (AI), which has fueled demand for advanced semiconductors, it said.
Taiwan’s exports in the first eight months of this year expanded 10.9 percent year-on-year to US$308.57 billion, thanks to demand for electronics used in cloud-based data centers and the development of AI applications, government data showed.
The AI boom has not lifted Southeast Asia, which mainly produces low to mid-tier chips. Trade has played a key driver of growth for much of the region, but its impact has been uneven, Moody’s Analytics said.
Nevertheless, external demand in the region has been treading water due to slowing US growth and Europe’s stalled economy, it said.
Specifically, growth in global chip billings has decreased in the past few months, suggesting that shipments of tech products would decline, with no guarantee that domestic demand would offset the drop, Moody’s Analytics said.
At the same time, consumer prices are cooling in the region despite intermittent hiccups linked to bad weathers, it said, as is the case with Taiwan.
Moody's Analytics said that inflation is mostly in line with central bank targets even though risks are still skewed toward inflation overshooting rather than undershooting.
Food prices are jumpy and energy prices hover above pre-pandemic averages, it said, noting that a flare-up in commodity prices could stoke inflation and fuel monetary tightening.
Taiwan’s central bank last week left key policy rates intact, but hiked the required reserve ratio and stiffened lending terms to rein in the housing market, at odds with a rate cut by the US Federal Reserve to support the economy.
Meanwhile, elections in the US and Europe would further complicate the growth outlook, it said.
Potential shifts in US economic policy following the presidential election in November are a major concern, as US exports drive growth for much of the region, it said, adding that economies heavily dependent on strong US ties would be most affected.
The US has grown into Taiwan’s second-largest export destination due to a rapid increase in shipments of AI-related electronics.
Moody’s Analytics expects regional currencies to appreciate going forward after the US Federal Reserve cut interest rates by 50 basis points last week and its median projections suggest more cuts of 50 basis points toward the end of this year.
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
RSS