Taipei, The Industrial Economics and Knowledge Center (IEK) said Thursday that it has lowered its forecast for the local manufacturing sector's production value growth for 2018, taking into account the trade friction between the United States and China.
The IEK, which is under the government-sponsored Industrial Technology Research Institute, said the output of Taiwan's manufacturing sector is expected to grow 3.27 percent from a year earlier to NT$18.89 trillion (US$617 billion) in 2018.
The forecast 3.27 percent increase is 0.02 percentage points lower than an April estimate by the IEK in the wake of rising concern over the trade dispute between the world's two largest economies.
The research group said Taiwan has benefited from growing global demand during the world's economic recovery in the first half of this year, boosting outbound sales in a wide range of products, in particular semiconductors and machinery.
However, the group said, growing trade tension between Washington and Beijing is likely to have an impact on global economic growth, which could affect global consumption and in turn hurt outbound sales and the output of the export-oriented manufacturing sector in the second half of this year.
On July 10, the administration of U.S. President Donald Trump released a list of US$200 billion-worth of Chinese goods that could be hit with 10 percent tariffs, part of a U.S. strategy to retaliate for what it sees as China's unfair trade practices.
The tariffs could take effect after public hearings are held at the end of August.
That would follow 25 percent tariffs imposed by the United States on US$34 billion-worth of Chinese imports July 6 and Beijing's immediate retaliation with duties on the same value of U.S. goods.
The U.S. is considering separate duties on a further US$16 billion- worth of Chinese goods after a public hearing is held later this month.
The IEK said average international crude oil prices are expected to grow 30 percent from a year earlier in 2018 to beef up Taiwan-made petrochemical product prices, and electronics, consumer products, metal and electrical item sales are expected to grow at a steady pace, while the ongoing global trade dispute is likely to compromise the growth.
According to the IEK, the production value of the local information/electronics industry is expected to grow 3.11 percent in 2018, a 0.36 percentage point downgrade from its April forecast.
The IEK suggested that Taiwanese manufacturers should diversify their production bases by further extending their global reach in a bid to mitigate the impact resulting from the escalating trade conflict between the U.S. and China.
The IEK added that Taiwanese exporters also have to keep a close eye on fluctuations in the global foreign exchange market in order that they can hedge against possible risks.
Source: Focus Taiwan News Channel