00:00Nick, let's start with this more than 12 billion US dollar package the cabinet has just announced.
00:05Do you think it's enough to offset the potential damage from US tariffs?
00:09Well, I mean, whether it's enough is very much going to depend on kind of the final
00:13composition of these tariffs. But what we do know is that government spending this year was
00:17slated to be slashed by quite a historic amount. And so when we think about our own forecast for
00:22Taiwan, we were always expecting government consumption to be one of the bigger drags,
00:26given the fact that politicking in the legislative Yuen was really kind of having implications for
00:32the growth story. I mean, if the government can't execute its budget or if it's implementing its
00:37spending plans with a lot less fiscal resources than it had initially planned for, there are
00:41consequences for that. And so higher spending in the context of what was already happening in Taiwan
00:46is going to be a good thing anyway. Well, let's pull back a little bit. There have been divergent
00:51estimates on Taiwan's economic growth for this year. The IMF forecasts 2.9% growth, while local
00:58think tanks here gave estimates as low as 0.16%. Where do you fall on this question?
01:04Well, there is a very wide range of forecast calls right now, which I think is reflective of how
01:09uncertain the global environment is at the current time. Tariffs are really going to make or break
01:14Taiwan growth story this year. Now, for us at EIU, we are more bullish than I think the rest of the
01:19market. Our growth forecast is around 3.5%. And the reason why it's so high is because when we look
01:24at Taiwanese exported semiconductors, Taiwanese exported electronics, they're what we call
01:28inelastic goods. These are goods that are hard to substitute. And so even despite everything that's
01:34going on with the tariffs, we're expecting there to be exemptions. We're expecting there to be
01:38negotiations that would insulate Taiwanese trade flows. Taiwan is irreplaceable in many ways.
01:43And that's going to be something that not only Taiwanese policymakers have to think about,
01:47but also U.S. policymakers in terms of how aggressive they can push their hawkish trade
01:51policy. So do you see this as the anti-tariff version of Taiwan's so-called silicon shield?
01:58I think it is. I mean, I think silicon shield is an interesting concept in the sense of,
02:01you know, how it relates to national defense. But Taiwan indisputably occupies a very advantageous
02:09part of the global value chain. I think even the concerns that we have around Taiwan,
02:15you know, Taiwanese companies investing in other markets and whether this is going to
02:20reduce that silicon shield, I think those are somewhat misplaced given that the crown jewels,
02:25the most innovative semiconductors, the most advanced production, that all still seems to
02:28be very much localized in Taiwan. And we don't see that changing anytime soon.
Comments