February 2024  
Persistently varied global economic dynamics cast a veil over worldwide recovery
TIER’s composite indicators offer promising signals of economic revival
Observing the recent international economic trends, the United States has experienced a decline in retail sales due to the impact of the cold weather in January. However, the manufacturing Purchasing Managers’ Index (PMI) continues to rise, reaching its highest value since 2023. The overall economic confidence in the Eurozone has slightly decreased. Japan has benefited from the demand for automobiles and semiconductor manufacturing equipment, resulting in a strong performance in January exports. With the upcoming Lunar New Year holiday and some industries entering the traditional slow season, the manufacturing PMI in China remains below the boom-bust line. On the domestic front, the semiconductor supply chain inventory gradually depleting and the expansion of the AI chip market have improved the sentiment of the electronic machinery industry for the current month and the next six months compared to the previous month's survey. For the traditional industries, the consumption momentum of domestic demand in China is still under observation. The service industry has seen robust growth in deposits and stable securities brokerage business, leading financial-related industries to view the economic outlook optimistically. In the construction industry, the positive atmosphere in the housing market is influenced by the domestic economic recovery and stable performance of the stock market. According to the survey results from the Taiwan Institute of Economic Research (TIER), after model calculations, the Composite Indicators for the manufacturing, service, and construction industries all showed a simultaneous increase in January 2024. Specifically, the Composite Indicators for the service and construction industries have been on an upward trend for three consecutive months, while the manufacturing industry's Composite Indicators have been on an upward trend for two consecutive months. ...Read more
Japan announces subsidies for second chip fab by Taiwan’s TSMC
Japan will spend 732 billion yen (NT$153.78 billion, US$4.86 billion) in subsidies for a second plant in Kumamoto by Taiwan Semiconductor Manufacturing Co. (TSMC), the Japan government said Saturday (Feb. 24) after the opening of the first fab. During the launch ceremony, Prime Minister Kishida Fumio said in a prerecorded message that he supported plans for a second chip factory on the southern island of Kyushu. Afterward, Economy, Trade, and Industry Minister Saito Ken came up with more details, saying that the Cabinet had already planned the level of subsidies for the project. The minister said he was unable to specify the location of the second factory, but CNA reported it would be a 20-minute drive from the first plant. Saito said one condition for the subsidies would be a high proportion of local sourcing for the factory. The first plant was a joint venture between TSMC, Sony Semiconductor Solutions, and Denso Corporation under the name of Japan Advanced Semiconductor Manufacturing (JASM). Toyota is expected to join the second project. In his address at Saturday’s event, TSMC founder Morris Chang said the production of semiconductors at the plant, expected to start during the final quarter of 2024, would launch a revival of Japan’s chip sector (Source: Taiwan News).

Taiwan's trade negotiator to lead delegation to WTO meeting in Abu Dhabi (Source: Focus Taiwan).
AI in focus at mobile fair in Spain (Source: Taipei Times).
Taiwan Economic Research Monthly
The physiology, pathology, and pharmacology of housing prices
The economic and social system is a complex interplay of numerous factors, where almost all issues are part of a larger whole. Minor changes in certain areas can lead to significant shifts in seemingly unrelated problems, a phenomenon known as the butterfly effect. From this perspective, it seems that all problems need to be considered holistically, and solutions should be approached with a comprehensive mindset. However, the entirety is so vast that it is beyond our grasp and understanding. When formulating monetary policies, it is neither possible nor necessary to consider whether it will alter the movement of a small asteroid or cause heavy rainfall in a particular country when catching a butterfly. The butterfly effect is often too small to observe and calculate, and similar factors are too numerous to comprehend, with many potentially canceling each other out. Therefore, attempting to directly predict and prevent the disasters of storms is evidently more economically efficient than trying to control the actions of a specific butterfly, a few butterflies, or all butterflies globally. As a result, most economic problems can only be analyzed within a specific scope and considering certain factors, rather than attempting to analyze the entire universe.
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