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Policy Divergence Heightens Global Financial Volatility Risks
Currency Depreciation and ICT Exports Support Taiwan’s Business Confidence |
Policy Decoupling Monetary policies among major central banks have diverged significantly. The Federal Reserve extended its easing cycle with bond purchases, contrasting with the ECB's hold, the BOJ's rate hike, and the PBOC's accommodative stance. This decoupling risks disrupting global capital flows and heightening market volatility.
Domestically, strong AI, high-performance computing, and cloud services demand sustained customer procurement momentum. Though non-AI sectors offset some growth due to weak demand and competition, overall momentum exceeded the prior month, with manufacturing sentiment improving for both current and six-month outlooks. In services, securities firms viewed current conditions favorably despite November's stock market pullback, benefiting from higher trading volumes and new Taiwan Innovation Board (TIB) listings. Wholesale businesses remained optimistic about current and six-month prospects, supported by recovering procurement, currency depreciation, and rising ICT exports.
Construction maintained growth momentum for both horizons as the public sector accelerated infrastructure to meet its 95% annual target. Major projects including the Tucheng-Shulin MRT elevated section and Eastern Loop Line will commence in 2026, sustaining engineering demand. High-tech facility projects progressed steadily, generating consistent plant construction and electrical engineering demand. In real estate, stronger fourth-quarter buying lifted existing home sales modestly, though November transactions fell 6.3% month-over-month due to limited new completions. The central bank's recent decisions resemble targeted measures rather than broad liberalization. Owner-occupiers remain the primary support, but investors and multi-property owners face financing cost and lending constraints. With persistent buyer-seller price gaps, the housing market will likely remain in low-level consolidation. ...Read more |
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| Holistic Considerations for Global Corporate Deployment and Industrial Structure Adjustment |
| As a small open economy, Taiwan's development depends on leveraging international opportunities. Yet policy discussions often reflect fragmented perspectives, leading to conflicting recommendations. A more comprehensive analysis from national and global viewpoints is essential. In Taiwan's early development, the strategy was straightforward: export available products, then expand production based on competitive or comparative advantages. Beyond exploiting existing resources, Taiwan accumulated capital and technology to reshape its comparative advantages. Today's international landscape differs significantly. Large-scale outward FDI poses genuine hollowing-out risks, exemplified by the 1980s notebook computer industry migration, where entire supply chains relocated. However, refusing overseas investment threatens long-term competitiveness. Even dominant sectors like semiconductors and ICT face a dilemma: withholding investment from international partners may forfeit crucial collaborative opportunities. Strategic moderate overseas investment can consolidate current leadership while cultivating future competitive industries. Geographic diversification and Taiwanese business clustering help prevent displacement. TSMC exemplifies this approach: overseas production facilities are moderately dispersed while Taiwan maintains technological leadership, accommodating local demand and self-sufficiency requirements. Critically, no single overseas hub should grow large enough to rival Taiwan as the production center. This clustered migration strategy, though appearing sudden and substantial, proves more advantageous than piecemeal forced relocations or scattered investments that enable local competitors to replicate Taiwan's capabilities, as occurred with the shiitake mushroom industry. With China and other nations employing government intervention and unfair practices, and even the U.S. aggressively supporting domestic industries, Taiwan must adopt a more holistic, proactive approach to industrial policy. |
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Taiwan Economic Research Monthly
Building the Energy Bridge to 2050 – Taiwan's Transition from Low-Carbon to Carbon-Free |
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The irreversible global shift toward net-zero emissions has entered a bridging phase from "carbon reduction" to "decarbonization." Success depends on establishing foundations across policy governance, industrial strategy, and global positioning. This special issue explores how Taiwan can build robust connections between low-carbon and carbon-free pathways. Governance articles examine how market mechanisms and policy coordination shape low-carbon transitions, extending to social acceptance, carbon pricing, and demand management—revealing how behavioral incentives and institutional trust support transformation. Industrial strategy articles focus on mid-term power system transitions, exploring natural gas as transitional fuel, emerging technologies including hydrogen and carbon capture, and how price signals influence investment stability as renewables shift from subsidies to market mechanisms. The international perspective addresses climate governance and sustainability standards, examining how Taiwan can align with global norms in carbon management, green electricity frameworks, and corporate disclosure to establish a resilient, competitive zero-carbon position. Taiwan's net-zero journey builds bridges across governance, industrial transformation, and international integration. Only by establishing adaptive institutions and strengthening cross-sector collaboration before 2035 can this energy bridge support Taiwan's 2050 net-zero goal toward a resilient, efficient, and sustainable energy future.
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