July 2022  
Tightening measures coping with global inflation pressure and causing consequences
TIER forecast updated: Taiwan’s 2022 annual GDP growth rate will stand at 3.81%
Affected by the stalemate of the Russian-Ukrainian war, the prices of international energy and food have been pushed up, and the global inflation pressure has continued to rise. Major central banks have launched a cycle of raising interest rates and tightening monetary policies to ease the pressure of rising prices. The U.S. Federal Reserve’s hike in interest rates and shrinking its balance sheet has put pressure on global financial asset prices. The stock and bond markets of major economies have been revised downwards. Emerging markets are also facing challenges such as capital outflows and currency depreciation. In addition, high prices have affected the real purchasing power of consumers, and the fiscal stimulus is far below the level of the past two years, which has also slowed down market demand. Major international forecasting agencies have revised down the global economic and trade growth performance in 2022 several times this year. On Taiwan’s domestic front, the trade continued to grow at double digits in the first half of this year, benefiting from the continued strong demand for emerging technology applications, the gradual improvement in the shortage of materials in the supply chain and the increase in product prices. Since the beginning of this year, due to factors such as rising prices, sharp corrections in the financial market, and the rise of the COVID confirmed cases, the performance of private consumption has been weaker than originally expected. According to the latest forecast of the Taiwan Institute of Economic Research (TIER), the GDP growth rate in 2022 standing at 3.81%, which is revised down by 0.29 percentage points from the forecast in April. According to the survey results of TIER, the business composite indicators of the manufacturing, services and construction declined simultaneously in June. ...Read more
Public firms raise less cash on rate hikes
Publicly traded companies raised NT$338.81 billion (US$11.33 billion) in funds in the first half of this year, down 27.76 percent from a year earlier, as higher interest rates raised the cost of corporate bond issuance and affected firms’ willingness to finance debt. The 27.76 percent annual decline was the largest for the six-month period since 2016, when the figure dropped 41.3 percent. Another factor was reduced bond sales from contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC). However, the number of companies applying to raise funds increased 13.53 percent from a year earlier to 193 in the first half, indicating that demand still existed, but companies had reduced the scale of fundraising after the central bank raised its policy rates twice in the six-month period to curb inflation. Companies’ fundraising activities were largely aimed at repaying debt, while some firms raised funds to expand production capacity (Source: Taipei Times).

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Taiwan Economic Research Monthly
SMEs and new start-ups should incorporate more ESG thinking
ESG has set off a whirlwind in the world in recent years and has gradually become a prominent study. As issues such as environmental pollution, climate change, corporate social responsibility and supply chain management have surfaced one after another, and have attracted the attention of governments around the world, ESG, which covers a wider range and touches deeper levels, has become an important part of assessing the sustainability of a company. The key indicators of continued operation are also an important reference for many international investment institutions when making investment decisions. More and more countries are choosing to speed up their efforts to find solutions for the huge impact ESG may have on industries or companies. It is worth noting that the global ESG wave is coming, and it will not only affect large enterprises, but also small and medium-sized enterprises and new start-ups. If these companies fail to respond as soon as possible, they will be excluded and it will be difficult to integrate into the global supply chain system.
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