Last week, Quanta Computer Inc’s decision to trim its workforce at its Taoyuan production facility, along with local media reports that some high-tech companies in the Hsinchu Science Park have also been considering recruitment freezes, indicated that the business climate in Taiwan’s tech sector has turned significantly weaker in the second half of the year, which is the traditional high season for electronics.
This is a worrisome sign for Taiwan because it showed that worsening debt problems in the eurozone and weakening economic growth in the US have not only hit the local tech sector’s outbound shipments, but would also have an impact on the domestic labor market.
Economic data released last week provided more reasons for concern about the nation’s export--oriented economy. The Ministry of Economic Affairs on Tuesday said that export orders increased 5.26 percent year-on-year last month to US$36.71 billion — much slower than the 11.12 percent rise in July and the slowest in nearly 22 months.
The latest export order data showed a general moderation in demand for Taiwan’s overseas shipments over the next one to three months from the nation’s major export markets, excluding the six ASEAN countries.
A closer look at the data revealed that substantially slowing demand for orders for Taiwan’s major tech goods — electronic components, precision machinery, and information and communications products — has alarming implications for GDP growth in the fourth quarter, not to mention the whole year.
Given the increasing downside risks to the global economy, the IMF — in its biannual World Economic Outlook report released on Tuesday — revised downward its GDP growth forecast for Taiwan from 5.4 percent to 5.2 percent for this year, and from 5.2 percent to 5 percent for next year, after it cut growth forecasts for the global economy to 4 percent for this year and next year, from 4.3 and 4.5 percent respectively.
While most government officials still emphasized that the nation’s economic fundamentals were in good shape, no one can deny that Taiwan is certain to be influenced by eurozone and US economic woes.
Pointing to the slowing growth in export orders last month, the continued slowing growth in imports since April and the IMF’s slashing of GDP growth forecasts for Taiwan this year and next year, Council of Economic Planning and Development Minister Christina Liu (劉憶如) on Wednesday warned that Taiwan is facing growing headwinds through the end of next year.
The latest unemployment rate figure released by the Directorate-General of Budget, Accounting and Statistics on Thursday came as no surprise, as it rose for the third straight month to 4.45 percent last month as college graduates entered the labor market. An obvious concern, however, is the slow hiring in tech manufacturing and trade sectors, which reflected producers’ downbeat outlook and might lead to more postponing of capital spending and recruitment into next year, Standard Chartered Bank economist Tony Phoo (符銘財) has said.
Then, on Friday, the ministry’s industrial production data showed last month’s output rose 3.88 percent year-on-year, which was not only a sharp drop from the double-digit growth seen early this year, but also provided more evidence that external uncertainties are weighing on domestic manufacturers.
Against this backdrop, stock market investors foresee bigger challenges ahead. The benchmark TAIEX has plunged 21.47 percent since the beginning of this year after the recent global market rout pushed the index to a nearly two-year low on Friday. No one knows when the market will bottom out; what we do know is that the government has no other options but to boost domestic consumption and investment, or the public will have to be prepared for hardship.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
The military is conducting its annual Han Kuang exercises in phases. The minister of national defense recently said that this year’s scenarios would simulate defending the nation against possible actions the Chinese People’s Liberation Army (PLA) might take in an invasion of Taiwan, making the threat of a speculated Chinese invasion in 2027 a heated agenda item again. That year, also referred to as the “Davidson window,” is named after then-US Indo-Pacific Command Admiral Philip Davidson, who in 2021 warned that Chinese President Xi Jinping (習近平) had instructed the PLA to be ready to invade Taiwan by 2027. Xi in 2017