Local manufacturing sector to grow 3.1% in 2014: IEK
By John Liu, The China Post
April 24, 2014, 12:00 am TWN
TAIPEI, Taiwan -- Thanks to developed nations' economic recoveries, the local manufacturing sector is expected to grow 3.1 percent this year, up 0.89 percentage points from last year, the government-sponsored Industrial Technology Research Institute (ITRI, 工業技術研究院) said yesterday.
The Industrial Economics and Knowledge Center (IEK) of the ITRI held a press conference yesterday to make a presentation on local manufacturers' performance.
Compared with last year, Taiwan is expected to see a higher economic growth in 2014, according to forecasts made by various economic research institutes, both domestic and abroad.
Economic recovery in the U.S. and Europe will be the key factor to driveing growth, said IEK researcher Peter Chen (陳志強). On the negative side, the U.S. Fed's tapering off of quantitative easing (QE) may impact emerging markets. Also, mainland China is in the process of beefing up its supply chain, meaning it may rely less on imports in the future.
Performance of Taiwan's Four Manufacturing Sectors
According to IEK's research, Taiwan's four major manufacturing sectors — the metal and machinery industry, the information and electronics industry, the chemical industry and the consumer goods industry — will grow 1.36 percent, 5.11 percent, 3.01 percent and 1.93 percent, respectively.
The metal and machinery industry will grow as a result of strong demand for machinery and automobile components.
The information technology and electronics industry will see strong growth, thanks to high demand for mobile devices and a prosperous performance in the semiconductor sector, most notably Taiwan Semiconductor Manufacturing Company (TSMC, 台積電).
The chemical industry will grow as a result of local businesses' active expansion into emerging markets. The consumer goods industry will grow due to a better outlook for the food and textile industries.
Lack of FTA's Impact Taiwan's Exports
In the press conference, IEK's researchers stressed the importance of signing free trade agreements (FTA) with other countries. IEK pointed out that while exports contribute 76 percent of local GDP, the nation has signed FTAs with only seven countries.
Other major exporters, such as Japan, mainland China, Singapore and South Korea, have inked FTA with 15 countries, 22 countries, 32 countries and 47 countries, respectively.
This has had a huge impact on Taiwan's exports, which grew merely 1 percent in the first quarter of 2014, substantially lower than the 10.4-percent average between 2003 and 2013. While IEK forecast the nation's manufacturing sector to grow 3.1 percent, it was actually 0.07 percentage points lower than its previous forecast made in February.