Taiwan yesterday cut its GDP growth forecast for this year to 3.1 percent, marginally lower than the previous estimate of 3.14 percent, weighed by expectations of a sharp slowdown in the second half due to global trade tensions and tariff pressure from the US.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) said economic momentum is likely concentrated in the first half with a growth of 5.35 percent, but might weaken to 1 percent for the remainder of the year.
DGBAS Minister Chen Shu-tzu (陳淑姿) attributed the expected slowdown to attenuated global demand and the impact of US protectionist trade policies under US President Donald Trump.
Photo: CNA
Taiwan’s traditional high season for exports — typically driven by strong holiday demand for consumer electronics in Western markets — might be muted by trade uncertainty and tariff volatility, Chen said.
The IMF last month downgraded its global trade growth forecast for this year to 1.7 percent, from 3.2 percent in January, citing declining momentum across key economies, she said.
Despite the global headwinds, Taiwan’s tech sector remains robust so far, as electronic components and information communications technology products make up nearly 70 percent of outbound shipments, benefiting from keen artificial intelligence (AI) infrastructure demand, the statistics agency said.
Major cloud service providers and national governments are aggressively expanding computing power, while supply chain bottlenecks have eased, paving the way for continued export growth, Statistics Department head Tsai Yu-tai (蔡鈺泰) said.
That explained why Taiwan’s economy grew 5.48 percent in the first quarter from a year earlier, slightly above last month’s estimate of 5.37 percent and significantly stronger than February’s forecast of 3.46 percent.
However, the bulk of exports would likely take place in the first half of the year, with a volume of US$275.7 billion, up 22.55 percent from a year earlier, largely on the back of front-loading to dodge US tariffs, the DGBAS said.
Exports are expected to contract 3.2 percent to US$242 billion in the second half, mitigating full-year growth to 8.99 percent at US$517.7 billion, Tsai said, adding that tariffs and foreign exchange rates carry a heavy weight in deciding market directions.
Sweeping tariffs on global trading partners would also negatively impact Taiwanese goods made in third countries and shipped to other destinations, Tsai said.
Private investment would be another bright spot, helped by the AI boom that would lead semiconductor suppliers to expand advanced manufacturing and packaging capabilities, the DGBAS said.
However, a cooling real-estate market and persistent geopolitical risks have tethered overall investment interest.
The agency is now looking at investment growth of 5.77 percent, a downward revision of 0.41 percentage points from the previous prediction.
Consumer spending remains resilient, thanks to a stable labor market, rising wages and higher dividend payouts from listed companies, it said.
Nevertheless, mounting global economic uncertainty and financial market volatility are restraining confidence, it said.
Private consumption is forecast to grow 1.64 percent this year, down 0.48 percentage points from the earlier projection, the DGBAS said.
Against that backdrop, Taiwan’s consumer prices might rise 1.88 percent, indicating manageable price pressures despite external risks, it said.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
TECH WINNERS: Taiwan and South Korea reported robust trade, which suggests that they have critical advantages in the rapidly expanding AI supply chain, an official said Exports last month surged to a new high, as booming demand tied to artificial intelligence (AI) infrastructure fueled shipments of advanced technology components, underscoring the nation’s pivotal role in the global semiconductor supply chain. Outbound shipments climbed to US$80.18 billion, the highest ever for a single month, rising 61.8 percent from a year earlier and marking the 29th consecutive month of growth, the Ministry of Finance said yesterday. “The surge was driven primarily by global investment in AI infrastructure,” Department of Statistics Director-General Beatrice Tsai (蔡美娜) said. The mass production of next-generation AI computing systems has accelerated procurement across the semiconductor supply
RSS