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Global manufacturing under cost pressures amid geopolitical conflicts and supply chain disruptions
AI fuels domestic manufacturing and stock market growth, while international energy volatility weighs on business outlook |
Since the outbreak of hostilities in the Middle East, risks to energy supply have intensified, driving up international oil prices and global inflationary pressures. As financial market expectations for rate hikes by major central banks have grown, long-term government bond yields in major economies have risen accordingly, and volatility in financial markets has increased markedly. Against the backdrop of elevated energy prices and persistent supply chain pressures, manufacturing PMIs in the United States, the Eurozone, Japan, and China remained in expansionary territory in April; however, input and output price indices broadly rose across these economies, reflecting the cost pressures that global manufacturing is facing from geopolitical conflicts and supply chain disruptions.
On the domestic front, robust demand for AI continued to support growth across related supply chains. Nevertheless, geopolitical tensions in the Middle East have pushed up raw material costs and created instability in material supply. In addition, some manufacturers had front-loaded inventory purchases in March to guard against potential supply disruptions, resulting in a pronounced base effect in April. As a result, manufacturers' assessment of business conditions in April weakened compared to the prior month. Furthermore, with international geopolitical conflicts continuing to simmer, manufacturing firms largely expect business conditions over the next six months to remain broadly unchanged. ...Read more |
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| Stablecoins and the Definition of Money |
| The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) provides stablecoins with a clearly defined regulatory framework and legal status, prompting considerable debate over whether stablecoins qualify as money and whether they should be incorporated into monetary aggregates. M. Friedman's seminal contribution lies in proposing the explanatory power of monetary quantities over changes in aggregate income as the criterion for determining the composition of monetary statistics—an approach that is decidedly more rigorous. Drawing on the author's prior research, the monetary character of various assets in both theory and practice evolves over time as institutions and conventions change, rendering any given estimation only indicative rather than definitive. Stablecoins remain at an early stage of development and adoption, and sufficient data for estimating their macroeconomic impact have yet to accumulate. This suggests that in an era characterized by diverse and rapidly shifting liquid assets and payment methods, adaptability to unforeseen change is of greater importance than any fixed measurement framework. In an age of financial innovation, close attention must be paid simultaneously to a range of relevant indicators. The liquidity of new financial assets—and of certain existing ones—is expanding as a result of emerging technologies and evolving regulations. Researchers may therefore need to monitor the functional roles of various asset classes and their theoretically anticipated effects, rather than focusing narrowly on movements in a single aggregate. Given the high transaction efficiency and rapid financial turnover velocity of stablecoins, the ratio of holdings motivated by transaction demand relative to intended expenditure is considerably lower than that observed with conventional deposits. Nevertheless, if the carrying cost of stablecoins remains low, holders may face little incentive to convert them into other assets promptly. This renders the forecasting of stablecoin-induced expenditure more difficult and less precise. Employing a broader set of indicators and more sophisticated models in both theoretical and policy analysis is thus necessary. That said, if a single indicator must be identified for policy purposes, credit creation may prove more practical than any particular monetary definition or aggregate asset measure—a question that warrants further discussion and analysis. In this regard, the GENIUS Act's prohibition on credit creation by stablecoins may well be regarded as an ingeniously preemptive design, forestalling further complexity in monetary governance. |
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Taiwan Economic Research Monthly
International Experiences in SME Revitalization and Policy Implications for Taiwan |
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Amid rapidly evolving global trade conditions, accelerating digital transformation, and growing international momentum toward net-zero carbon emissions, SMEs face both the imperative of transformation and the opportunity for upgrading. To support Taiwan's SME sector in navigating this period of disruption, this special feature examines policy experiences across multiple countries, offering strategic guidance and actionable directions to help business owners stay attuned to global developments. On digital development, the feature explores how Singapore has leveraged technology enablement to strengthen SME competitiveness. On transformation guidance, it examines Japan's strategic shift from passive relief measures toward proactive structural intervention aimed at rebuilding enterprise resilience. The South Korean case investigates how firms have broken through growth bottlenecks and identified new sources of dynamic growth amid intensifying competition. Malaysia's experience in advancing industrial upgrading and steering enterprises toward high-quality development is also highlighted. On green sustainability, Germany's approach illustrates how well-designed policy frameworks enable SMEs to pursue net-zero targets while preserving competitive capacity. The feature concludes by synthesizing these international experiences to distill strategies most applicable to Taiwan's context. It is hoped that this special issue will serve as a practical reference for Taiwan's SME owners in charting their future trajectories — drawing on international lessons, identifying distinctive niches, and forging a more resilient and competitive path forward amid the twin imperatives of digital and green transition.
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