Fitch Ratings yesterday forecast that Taiwan’s economy would expand 3.4 percent this year before slowing to 2.7 percent next year, citing downside risks from external factors.
The credit rating agency said growth could be curbed by a sharp slowdown among Taiwan’s key trading partners, softer global demand for artificial intelligence (AI), and uncertainties stemming from geopolitical tensions and US trade policy.
The agency’s upgrade to this year’s forecast — from its earlier projection of 2.8 percent growth — reflected stronger-than-expected performance, as some industries front-loaded shipments ahead of tariff concerns, Sophia Chen (陳怡如), deputy director for Asia-Pacific banking ratings at Fitch, told a news conference.
Photo: CNA
However, Fitch said that Taiwan’s traditional industries face increasing pressure.
The energy transition would require significant capital investment, raising credit risks, while the retail sector might be weighed down by weak consumer confidence and intensifying competition, said Jenny Huang (黃筱婷), senior deputy director of Asia-Pacific corporates.
The sharp appreciation of the New Taiwan dollar could erode profits for export-oriented industries by weakening price competitiveness, although companies dependent on imported raw materials and equipment might benefit from lower costs, she said.
Excess capacity pressures in traditional industries pose risks for Taiwan, as Chinese firms expand overseas and emerging Asian markets accelerate local industrial development, she said.
Export-driven sectors such as petrochemicals, chemicals and steel might remain under strain, facing overcapacity, weak profitability and fragile cash flow, she added.
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