Taiwan: Power under pressure

Michael (C-Y) Yang, CBC: As major central bank interest rates have risen sharply since last year, concerns have been raised about a global economic slowdown. In addition, weak demand for consumer electronics and ongoing inventory adjustments limited the growth momentum of Taiwanese exports. Gloomy export prospects and weak market confidence hampered private investment growth. There are other challenges, including the pace of China’s economic recovery and the fallout from bank failures in the US and Europe. However, there is a chance for exports to regain momentum in the second half of the year.

Tony Phoo, Standard Chartered: The current market consensus is that the current recession in the consumer electronics sector will bottom out in the second quarter. Also the expectation that the stock correction will end. Standard Chartered forecasts a 2.2% increase for the full year 2023.

However, there are a few points to consider.Looking at Taiwan’s export data and the number of export orders, the year-on-year contraction rate has actually deteriorated compared to the fourth and third quarters of last year, and we have not seen any signs that the rate is being set too slowly. decrease or stabilize over the next two quarters.

Recent discussions with some corporate customers have also raised some concerns. Some who had predicted that consumer electronics price declines would bottom out around the second quarter of this year are now concerned. Second, many expected the Chinese economic recovery to spill over to export-oriented economies like Taiwan, but in recent months we have seen that China’s recovery is still very limited or specifically focused on domestic services. associated wear and tear.

Third, while the US and Europe have outperformed the overall market so far, we must be wary of side effects given the recent turmoil.

Ruby Ho, HSBC: In the last three years, Taiwan has had a relatively higher basic GDP than many other countries. Our average GDP is around 4.1%, which is well above South Korea’s average of 2%, while Japan’s GDP is almost 0.3%. And geopolitics harbors both opportunities and threats.There is higher demand for national security industries created by major Western countries, such as chip industry, biotechnology, medical AI, etc., and Taiwan is a key supplier in the chip supply chain as well as a key computer equipment (OEM) manufacturer. [OEM] packaging and testing [equipment]. As long as Taiwanese companies follow this global network – which is our relatively strong niche – the advantage will remain as these companies are already quite internationalized.