TAIPEI (TVBS News) — Over a thousand exhibitors from 22 countries participated in the Japan International Machine Tool Show earlier this month in Tokyo, including companies from Taiwan, all hoping to attract more business. Global inflation, soaring interest rates, the ongoing Russian-Ukrainian War, and the slowdown of China's economy are leading factors in why Taiwan is seeing low export numbers in the 4th quarter of 2022.
The Taiwan Institute of Economic Research announced their latest forecast for Taiwan's GDP growth in 2023 to be 2.91%, a decrease of 0.54% from 3.45% in 2022. The research institute anticipates that the economy will be better starting in the first half of 2023. The annual growth rates in the four quarters are expected to reach 2.4%, 2.5%, 3.13%, and 3.52%, respectively.
Sun Ming-Te, the Director of the Macroeconomic Forecasting Center, Taiwan Institute of Economic Research said "this year's epidemic, inflation, and the war between Russia and Ukraine have simultaneously shut down the world's three major (economic) engines, including the United States, Europe, and mainland China."
Despite the lower export numbers, domestic consumption in Taiwan has helped to support the economic momentum.
"After the two sessions next year, if everything can reopen after the pandemic, the first of the two engines will start to have a comeback, and the first will be mainland China," said Sun, Ming-Te, the Director of the Macroeconomic Forecasting Center, Taiwan Institute of Economic Research.
"The influence of mainland China on Taiwan may be on the traditional industries we've previously mentioned, petrochemical, rubber, and plastic machinery, which can start to resume their original production orders and sales after the second quarter of next year. The situation in the United States (inflation) may be a little more complicated. Our economy is now being supported by domestic demand," he added.
The Taiwan Institute of Economics estimates that in 2023, domestic consumption will be the key to supporting the economy, but scholars warn that this prediction may be too optimistic.
Wu Daren, the CEO of the Research Center for Taiwan Economic Development, National Central University explained that "inflation in the United States is cooling down now, but there is still a long distance from their policy target area, so the United States will not immediately stop raising interest rates. Moreover, even after they stop raising interest rates, they may not immediately cut interest rates, so that high interest rates may be held until after the second and third quarter of next year. So during this period, our exports from Taiwan will definitely still be seriously affected."
Wu shared that before the United States cuts down on interest rates, Taiwan's economy will still have to tackle many challenges head on, and it is important to be prepared and not be overly optimistic that domestic demand will be able to sustain the economy.
