《TAIPEI TIMES》 TIER raises GDP forecast to 4.3％
People walk through a shopping area selling decorations and supplies for the Lunar New Year holiday in Taipei on Wednesday last week. Photo: Ann Wang, Reuters
TRICKLE-DOWN: With TSMC facing supply constraints, smaller peers have benefited, raising prices, which have extended from chipmakers to chip testers and packagers
By Crystal Hsu / Staff reporter
The Taiwan Institute of Economic Research （TIER, 台灣經濟研究院） yesterday raised its forecast for the nation’s GDP growth this year from 4.01 percent to 4.3 percent, as private investment could grow after top technology firms announced aggressive capital spending plans.
The increase of 0.29 percentage points came after Taiwan Semiconductor Manufacturing Co （TSMC, 台積電） on Jan. 14 unveiled a capital spending plan of US$25 billion to US$28 billion for this year, which is much higher than market expectations and would drive companies in its supply chain to follow suit, TIER president Chang Chien-yi （張建一） told a news conference in Taipei.
The effect would create robust investment activity that would receive support from government efforts to bolster infrastructure and the ratio of renewable energy sources, Chang said.
The Taipei-based think tank expects a 4.8 percent increase in private investment, which is 0.19 percentage points higher than its prediction in November last year.
TSMC’s capacity is so tight that Germany, Japan and the US have reportedly asked the government to coordinate with the chipmaker to increase supply, TIER said.
TSMC’s supply constraint is benefiting smaller peer United Microelectronics Co （聯電）, which plans to raise prices for the second time after a recent hike, Chang said.
For three consecutive years, local chipmakers have helped the nation grow its fixed capital formation, while main trade rival South Korea has seen the GDP component contract, he said.
Upward price adjustments are extending from chipmakers to chip testers and packagers, TIER research fellow Arisa Liu （劉佩真） said, adding that the trend is favorable for job creation and private consumption.
Private consumption might grow 4.13 percent this year, even though international travel restrictions could persist through the third quarter, TIER said.
A stable economy, pay raises, a positive wealth effect linked to TAIEX rallies and a low comparison base would all lend support to private consumption, Chang said.
The weeklong Lunar New Year holiday next month would also fuel momentum, despite companies canceling year-end gatherings to help limit COVID-19 infection risks, Chang said.
The institute expects exports to expand 4.83 percent and imports to grow 4.87 percent this year, as the world would gradually emerge from the COVID-19 pandemic with the help of vaccines.
Business sentiment for the manufacturing industry was 106.21 last month, up 3.24 points from one month earlier, gaining for the eighth consecutive month, as electronics, machinery and steel makers are upbeat about business, TIER said.
The climate reading shrank 0.02 points to 96.52 for service providers, the institute said, adding that shipping companies and insurers have a positive outlook, while others held flat views.
The sentiment gauge for real-estate sectors fell 0.27 points to 108.96, as developers turned cautious amid renewed credit controls to curb housing price hikes, it found.