By Simon Xiao
GDP Forecast Raised
The Chung-Hua Institute for Economic Research (CIER) has revised its GDP growth forecast for 2024 to 3.81%, an increase from April’s estimate of 3.38%. This adjustment is attributed to robust global demand for AI technologies, heightened exports, and strong domestic consumption. These optimistic projections from CIER align closely with those from the Directorate General of Budget, Accounting and Statistics (DGBAS), which in late April raised its GDP growth forecast to 3.94% from 3.43%.
CIER anticipates a 5.63% increase in Taiwanese exports for 2024, a rise from last year’s 4.32%. According to the Ministry of Finance, total export value reached a 28-month high of US$39.9 billion in June. This figure represents a 6.9% increase from the previous month and a 23.5% year-over-year (YoY) growth, largely fueled by Taiwan’s critical role in the global AI surge.
In July, the Consumer Price Index (CPI) in Taiwan increased by 2.52% YoY, largely driven by a spike in fruit and vegetable prices following Typhoon Gaemi. This marked the third consecutive month that the CPI has surpassed the Central Bank’s target of 2%. However, the core CPI recorded a more moderate increase of 1.84% from the previous year. For 2024, CIER now forecasts a growth rate of 2.95% in private consumption, an improvement over the previous estimate of 2.09%. Additionally, the institute expects private investment to rebound, projecting a modest growth of 0.45%, a turnaround from the earlier forecast of a 0.2% decline.
China Airlines Resumes Taipei-Seattle Route
China Airlines in July resumed its direct route from Taipei to Seattle, a service initially launched in 2004 but suspended in 2008. Operating as flight number CI022, the service will now run five times weekly between Taipei Taoyuan International Airport (TPE) and Seattle-Tacoma International Airport (SEA). China Airlines aims to increase the frequency of flights next year to daily service after delivery of additional aircraft.
China Airlines joins Taiwanese carrier EVA Air and America’s Delta Air Lines in providing direct service to Seattle. Additionally, Taiwan’s Starlux Airlines is scheduled to begin its own Taipei-Seattle route in mid-August.
TAIEX in Flux
Following remarks by former U.S. President Donald Trump on July 16 regarding Taiwan’s dominance in the semiconductor industry, the Dow Jones U.S. Semiconductor Index shed over US$500 billion in stock value. Also contributing to the drop were reports that the United States is considering tightened controls on exports of advanced semiconductor technology to China.
During an interview with Bloomberg Businessweek, Trump characterized Taiwan’s success in the semiconductor industry as its having taken “almost 100% of the U.S.’s chip business.” Experts noted that the close and trusted working relationship between Taiwanese chipmakers, notably the Taiwan Semiconductor Manufacturing Co. (TSMC), and its American partners has made a huge contribution to U.S. strength in the high-tech sector.
Domestically, the Taiwan Stock Exchange Index (TAIEX) has recently seen dramatic fluctuations. On August 2, the index plummeted by 4.43% as investors reacted to negative cues from Wall Street, offloading tech shares amid growing concerns about economic weakness in the United States, according to analysts.
A sharp decline of 8.35% also occurred on August 5, following news of the strengthening of the Japanese yen. Stock markets around the world, especially in Asia, were impacted. However, the TAIEX rebounded significantly the following day, closing up 3.38% on August 6. This recovery was largely driven by gains in large-cap semiconductor stocks, notably TSMC and MediaTek.
IT Glitch Affects Airport Operations
A global IT outage originating from a defect in a software update disrupted airline operations worldwide, including at Taoyuan International Airport on July 19. Airlines such as AirAsia X, Tigerair Taiwan, Jetstar Airways, Hong Kong Express Airways, Jeju Air, and FlyScoot were impacted, resorting to manual processes for passenger registration and seat allocation due to issues with the Microsoft cloud-based booking management system Navitaire.
The Ministry of Digital Affairs (MODA) responded swiftly, inspecting critical government systems, including household registration and tax systems, and confirmed that these were operating normally. However, some personal computers experienced malfunctions. MODA has committed to ongoing monitoring and collaboration with Microsoft and relevant organizations to ensure the stability and security of Taiwan’s digital infrastructure.
The outage, caused by a flawed software update provided by cybersecurity company Crowdstrike, also led to flight cancellations by major U.S. airlines like American Airlines, Delta Air Lines, and United Airlines.
