Taiwan’s GDP is forecast to grow 5.3 percent year-on-year this year, as the nation’s non-electronics industries are expected to benefit from the latest Taiwan-US trade deal, which lowers US tariffs on Taiwanese goods to 15 percent from 20 percent, Yuanta Securities Investment Consulting Co (元大投顧) said in a report.
Other factors — such as Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) better-than-expected financial results and outlook, as well as the US applying a zero percent Section 232 tariff on Taiwanese semiconductors used in the US data centers and US-made products — also allowed Yuanta to raise GDP growth forecast from its previous estimate of 4.61 percent, the company said.
Yuanta’s forecast is higher than a market consensus of 3.8 percent growth forecast, the report issued on Friday said.
Photo: I-Hwa Cheng, AFP
Standard Chartered PLC last week predicted 3.8 percent growth for Taiwan this year, while the central bank and Asian Development Bank last month projected expansions of 3.67 percent and 4 percent respectively.
The Directorate-General of Budget, Accounting and Statistics in November pitched its GDP growth forecast for this year at 3.54 percent, but the agency is widely expected to revise upward its estimate later this month after the latest government data showed Taiwan’s exports and trade surplus hit record highs for last year.
The latest trade deal aligns Taiwan’s tariff rates with those of its major trading partners such as Japan and South Korea, and is lower than the current US tariff rates on China, Yuanta said.
Furthermore, certain products, like semiconductors and related products, auto parts, and wood and related products, receive most-favored-nation status, which means that even if US trade policies change in the future, the competitiveness of Taiwanese goods would remain unchanged, indicating less uncertainty for businesses, it said.
As most Taiwanese electronics exports to the US are currently exempt from tariffs, the trade deal would help boost the export competitiveness of Taiwan’s non-electronics industries and boost this year’s economic growth by 0.08 percentage points, it added.
TSMC at its earnings conference last week forecast a compound annual growth rate of 40 percent for related artificial intelligence (AI) revenue from this year to 2029, which affirmed a sustained, structural AI demand, Yuanta said.
In addition, TSMC’s upward revision of this year’s AI shipment growth forecast from 33 percent to 43 percent is expected to add an additional 4 percentage points to Taiwan’s export growth this year, thereby boosting this year’s GDP growth by 0.64 percentage points, it said.
Meanwhile, the US’ semiconductor tariffs under Section 232 of the Trade Expansion Act of 1962 pose no substantial negative impact on Taiwan’s economy, while reducing uncertainty about US future policies on semiconductor tariffs, Yuanta said.
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