A weekly snapshot of Taiwan business news stories brought to you by CommonWealth and AmCham Taiwan’s TOPICS
Strong Demand for Technology Drives Increased GDP Growth
Even as Taiwan has struggled to contain a local outbreak of COVID-19, the international community continues to have confidence in Taiwan’s economy. Taiwan Ratings, the Taiwan subsidiary of S&P Global Ratings, recently raised its projection of Taiwan’s 2021 GDP growth rate to from 4.2% to 5.6%, citing an increase in the island’s manufacturing exports and efforts by its semiconductor industry to boost output to resolve a global chip shortage.
In late May, Taiwan’s Ministry of Economic Affairs (MOEA) announced a 16.51% increase in its industrial production index and a 17.28% rise in its manufacturing production index, marking 16 consecutive months of positive growth. In addition, both indexes reached record monthly highs.
Meanwhile, export orders rose in May for the 15th consecutive month to US$52.29 billion, up 34.5% from May 2020. The MOEA’s Department of Statistics attributed the increase to the steady recovery of the global economy and the strong performance of the international raw materials market.
In terms of goods, orders for electronic and information communications products increased by 40.3% and 4.2%, respectively, as demand for new technologies such as 5G and high-performance computing continues to grow thanks to the proliferation of remote work and education.
As for whether the outbreak in Taiwan has affected manufacturers’ confidence, Statistics Department head Huang Yu-ling said that they asked 193 manufacturers whether their orders in May had been affected by the pandemic. Only 12 – or 6.2% – said they had experienced any impact. The orders of these respondents accounted for only 1.8% of the total sample.
Furloughs Increase as Level 3 Extended
Due to the implementation and subsequent extensions of the Level 3 pandemic alert, consumption in Taiwan has decreased significantly as people are less inclined to leave their homes.
In addition, the number of furloughed workers has increased, exceeding for the first time 10,000 employees in July. According to statistics released by the Ministry of Labor (MOL) on June 24, 987 companies in Taiwan are requiring employees to take unpaid leave, an increase of 362 companies – and 3,846 workers – from a week previous.
Among the companies enforcing unpaid leave arrangements, 175 are from the accommodation and catering industry, representing 2,864 employees – or 70% of the total number of furloughed workers.
According to the MOL, workers in the hotel and restaurant sector are asked to take on average 13-16 days of unpaid leave per month, the most of any other sector in the accommodation and catering industry.
As the Level 3 epidemic alert has been extended until July 12, some fear that unpaid leave and lay-offs will continue to rise.