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2019 growth forecast for Taiwan's manufacturing sector cut to 0.02%

2019/05/25 17:46:52

Taipei, May 25 (CNA) The government-sponsored Industrial Technology Research Institute (ITRI) has cut its growth forecast for the production value of Taiwan's manufacturing sector for 2019 to 0.02 percent, citing a weakening global economy amid trade frictions.

Estimating the 2019 output of the local manufacturing sector at NT$19.26 trillion (US$611 billion), the institute's forecast team on Friday downgraded its growth forecast for the year by 1.56 percentage points to 0.02 percent.

The growth forecast was lowered largely in reflection of a weakening global economy amid trade disputes between the United States and China, the team said.

It projected that Taiwan's export-oriented manufacturing sector would suffer an even greater impact if the U.S.-China trade war is not resolved, as global trade would deteriorate.

The U.S. has raised punitive tariffs on US$200 billion worth of Chinese merchandise from 10 percent to 25 percent and is planning to impose up to US$25 percent tariffs on an additional US$300 billion worth Chinese goods, pending a congressional hearing scheduled for June.

In addition, U.S. President Donald Trump last week issued an executive order and declared a national economic emergency that empowers the government to ban the technology and services of "foreign adversaries," a move that was seen as targeting Chinese telecom equipment maker Huawei Technologies Co.

Since then, Google Inc. has said it is planning to restrict Huawei's access to its Android operating system and also to limit access to its apps such as Gmail and the Google Play store in new handsets made by Huawei.

The business restrictions by Washington are expected to deal a serious blow to Huawei, the second largest smartphone brand in the world.

Under such unfavorable circumstances, many Taiwanese suppliers to Huawei could suffer, the ITRI said.

Among the major Taiwanese suppliers to Huawei are Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, and ASE Technology Holding Co., the world's largest integrated circuit packaging and testing services provider.

The China-U.S. trade war will also weaken global consumption and investment, which in turn will undermine confidence in Taiwan's manufacturing sector, the ITRI said.

The list of products released by the U.S. for the proposed new tariffs includes smartphones and notebook computers, which would adversely affect Taiwan's electronics industry, the ITRI said.

However, the impact of the China-U.S. trade war will be mitigated in Taiwan to some extent by the return home of overseas-based Taiwanese companies that respond to the Taiwan government's incentive program for returning investors, which was launched in January, the ITRI said.

So far this year, a total of 61 Taiwanese companies have already committed to returning and bringing back total investments of NT$310 billion, according to the Ministry of Economic Affairs.

(By Pan Tzu-yu and Frances Huang)
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