September 2022  
Rate hiking by the Fed and ECB may cope with inflation but hinder market demand growth
All 3 TIER’s composite indicators decline as industries facing headwinds
Observing the recent international geopolitical and economic situation, Russia has used energy supply as a weapon and issued a mobilization order to increase its troops, which has escalated the conflict between Russia and Ukraine. In addition, many countries continue to raise interest rates to fight inflation. Both the European Central Bank and the US Federal Reserve raised interest rates by 75 basis points in September 2022, and simultaneously revised down their 2023 economic growth expectations. The economic prospects of Europe and China are still problematic to be optimistic about. The Taiwan Institute of Economic Research (TIER) issued monthly composite indicators on September 26th. Its indicators suggest that Taiwan’s manufacturing, service and construction sectors are all facing headwinds to a certain extent for the time being. For manufacturing industries, the pressure of global inflation has restrained consumption; therefore, the relevant outlook for the next six months is still mostly flat or worse. The service industry is in the peak summer travel season. However, affected by rising prices, uncertain global economic prospects, and stock market volatility, consumer confidence continues to decline, making the prosperity of the next six months is lower than that in the previous month’s survey. In the construction industry, the injection of orders for various projects has weakened, the construction period of projects under construction has been prolonged, and the recognition of project payments has been delayed, reflecting the still conservative market conditions. ...Read more
Agriculture delegation signs letters of intent in US
An agriculture industry delegation from Taiwan has signed letters of intent with US officials to purchase more than US$2.6 billion of corn and soybeans from farmers in Minnesota, Iowa and Illinois. The Taiwanese Agricultural Trade Goodwill delegation led by Council of Agriculture Deputy Minister Huang Chin-cheng visited the three states to sign the letters of intent. Minnesota Governor Tim Walz, Iowa Governor Kim Reynolds, Illinois Governor J.B. Pritzker, US Senator Tammy Duckworth and other state officials were the US signatories. During the respective signing ceremonies, Reynolds and Pritzker expressed sympathy to Taiwan after a series of earthquakes, including a magnitude 6.8 tremor, struck the nation’s east on Sept. 17 and 18, the statement said. During the signing ceremony in Minnesota, Walz said bilateral economic and trade relations between Taiwan and his state are stable and expressed hope that the delegation would further deepen the friendship between the two sides. Reynolds said bilateral trade between Taiwan and Iowa had grown 7 percent on average over the past five years. Pritzker said that Taiwan is Illinois’ third-largest agricultural trade partner, adding that he hoped for a sustainable reciprocal friendship between the two sides. Meanwhile, Duckworth, whose constituency is in Illinois, said that while Taiwan was facing threats from its neighbor, presumably referring to China, a Taiwan-US agricultural trade agreement was not only beneficial to food and livestock trade, but also national security. She said she was pleased to see the deepening friendship between Taiwan and the US. During their US trip, the delegation also visited agriculture and biotechnology research parks, labs and technology centers at the University of Minnesota, Iowa State University and the University of Illinois at Urbana-Champaign (Source: Taipei Times).

Moody's affirms Taiwan's 'Aa3' ratings, changes outlook to 'stable' (Source: Focus Taiwan).
Economists expect rate increase in Q4 (Source: Taipei Times).
Taiwan Economic Research Monthly
Dignity work and free trade in Asia Pacific
The outbreak of COVID-19 in 2020 not only caused a huge impact on global economic activities, but also highlighted the issues of economic and social inequality, labor rights and social security under globalization. In order to accelerate the economic recovery in the post-pandemic era and at the same time strengthen their own resilience to the impact of future economic crises and emergencies, governments around the world are more active in promoting environmental, social and economic sustainability. In this context, how to take into account labor rights and social security while pursuing economic growth, so as to promote dignified labor, has become an important focus of APEC regional economic cooperation. According to statistics from the APEC Policy Support Unit (PSU), after the outbreak of COVID-19, the GDP growth rate of the APEC region in 2020 was negative 1.9%, and the average unemployment rate also climbed from 3.8% in 2019 to 5.0% in 2020. Although economic activities in the APEC region have gradually returned to normal as the COVID-19 eases and vaccination rates increase, the average working hours lost due to the COVID-19 in the APEC region in 2021 stood at 3.4%. In recent years, the concept of sustainable development of enterprises has risen, and many enterprises in Taiwan have also incorporated labor rights protection into corporate social responsibility.
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