Financial and Technology News

Manufacturing growth expected to slow

 2018/05/07
PREPARE FOR CHANGE:The IEK’s policy and regional research division deputy director said that the global supply chain is facing a major shift as the US pushes its trade policy.
 
The manufacturing sector is expected to grow at a slower pace of 3.29 percent this year to NT$18.93 trillion (US$642.7 billion), on concerns that an escalating China-US trade row could curtail electronics demand from Taiwan, the Industrial Economics and Knowledge Center (IEK) said.
 
“Escalating global trade disputes and decelerating demand for information and communications technology [ICT] products are likely to weaken the manufacturing sector’s performance,” IEK policy and regional research division deputy director Peter Cheng told a media briefing on Thursday.
 
“As the US pushes its free and fair trade policy, the global supply chain is set to experience a major shift,” Cheng said. “Taiwanese manufacturers are advised to be well prepared for the change, given their key role in China’s supply chain.”
 
About 26.7 percent of every US$100 ICT production value is linked to goods, or components exported to China and re-exported to global markets, IEK said, citing the latest statistics from 2014.
 
Local manufacturers including foundries, chip designers, flat-panel makers and automotive electronics makers are advised to improve their research and development efforts to cope with the shift, IEK said.
 
The ICT sector, the largest contributor to the manufacturing sector, is likely to suffer the brunt of the changes, with growth expected to slow to 3.47 percent annually this year, or 0.49 percentage points down from earlier estimates of 3.96 percent growth, IEK said.
 
The base metals and machinery sector is forecast to see production value grow 2.1 percent annually to NT$5.27 billion, rather than the 2.42 percent estimated three months ago, IEK said.
 
The petrochemical sector is forecast to go against the downtrend by growing at a faster annual rate of 5.09 percent this year to NT$4.69 trillion, compared with 4.88 percent estimated by IEK in January.
 
As for the livelihood sector — including the textile and tourism industries — output is expected to grow 1.95 percent to NT$2.33 trillion, better than an annual growth of 1.86 percent previously estimated by the center.
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