January 2024  
Although major markets appear to be heading for a soft landing, Taiwan’s exports are showing a resurgence
TIER’s composite indicators hint at signs of recovery
Observing recent international economic trends, despite a continued contraction in the manufacturing sectors of the US and Europe, there has been a slight improvement. Japan’s manufacturing industry has declined due to reduced global demand, but its service sector has seen modest growth as a result of expanding new business ventures. While China is still hindered by a sluggish real estate market, signs of slow recovery are emerging in its industrial and commercial activities. In Taiwan’s manufacturing sector, the lively opportunities presented by emerging technological applications, gradual destocking of supply chain inventory driving demand, and a relatively low comparison base have boosted Taiwan’s export growth rate in December 2023. Additionally, some traditional industries in Taiwan have shown improved export orders and production performance compared to the previous month, leading to a noticeably more positive outlook on the manufacturing sector for the current month and the next six months. Taiwan’s service industry has benefited from the holiday season, including Christmas and New Year festivities, corporate year-end banquets, increased year-end holiday flight traffic, and a subsequent boost in demand for dining and accommodation. Retail and hospitality industries are optimistic about the economic performance for the current month. In the construction industry, the year-end rush for construction projects and the peak season for home purchases, coupled with the government’s support for the “Youth Secure Home 2.0 policy”, have sustained continued strong demand. Considering the ongoing increase in the government's public construction budget for 2024 and a positive outlook for the housing market in the next six months, domestic construction industry players are optimistic about the economic performance for the current month and the next six months. ...Read more
U.S. House committee advances bill that includes tax relief for Taiwan
A bill that proposes, among other initiatives, to provide tax incentives in the United States for Taiwan businesses and workers, received strong bipartisan support in the committee stage in Congress on Friday. The U.S. House Committee on Ways and Means voted 40-3 to send the Tax Relief for American Families and Workers Act of 2024 to the House for a full floor vote on the proposals. The proposals include a plan to “strengthen America's competitive position with China by removing the current double taxation that exists for businesses and workers with a footprint in both the United States and Taiwan”, the committee said in a statement after the vote. Providing double tax relief for such businesses and individuals will help to expand innovation and competitiveness and promote economic growth, according to the committee. Jason Smith, chairman of the House committee, said in the statement that the Act is expected to help U.S. job creators stay competitive, allow Main Street businesses to survive and grow, and give tax relief to working families struggling under the weight of rising prices and interest rates. Taiwan’s Ministry of Finance has long been seeking a double taxation relief agreement with the U.S. to protect their mutual interests amid an acceleration of their economic exchanges and business activities. Meanwhile, in Washington, White House Press Secretary Karine Jean-Pierre said the progress of the Tax Relief for American Families and Workers Act was encouraging and welcome. She said the bill was expected to gain passage in the U.S. House and Senate, after which it would have to be sent to U.S. President Joe Biden to be signed into law (Focus Taiwan).

30 German students to come to Taiwan for chip production training (Focus Taiwan).
Swiss trade representatives meet with Tainan mayor (Taiwan News).
TSMC still eyeing 1nm fab venues following report (Taipei Times).
Taiwan Economic Research Monthly
Concerns in the era of high-interest rates
As we enter 2024, the first major issue facing the global economy is how long the "high-interest-rate" environment will persist. While data indicates a slowdown in inflationary pressures, it still falls short of the target range of around 2% set by the Federal Reserve (Fed) and the European Central Bank (ECB). The current deceleration in the inflation rate is primarily due to the decline in energy prices. However, ongoing supply-side changes, such as global supply chain adjustments, geopolitical-driven supply chain restructuring, and the green transformation driven by "decarbonization," continue, and inflationary pressures have not been completely eliminated. Moreover, a deceleration in the annual growth rate does not necessarily mean an actual decline in price levels. Looking at the US Personal Consumption Expenditures (PCE) Price Index, since the first half of 2021, it has accumulated a growth of 14.32%. In October 2023, the price index reached a new high of 121.34, making it challenging for consumers to perceive a slowdown in prices, and market confidence remains quite fragile. Fortunately for Taiwan, domestic inflationary pressures are not significant, and there is no need to simultaneously face the multiple challenges of high inflation, high interest rates, and economic recession. However, caution is still necessary regarding the impact of high-interest rates globally, ensuring the sound growth of the Taiwanese economy.
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