Global interest rate hikes should curb consumption. Scholars warn the economy may display in blue light in the first half of the year.

News briefing 

The monitoring indicators of the National Development Council (NDC) have shown a blue light since November and December last year, while global inflation and interest rate hikes in various countries are still on a rising trend. Even more, the European Central Bank will hike the interest rate to an even greater magnitude, which will suppress the demands in Europe and the United States. As such, the situation this year will worsen, and it is believed that the economy may linger at the blue light for the first half of the year.

Impact analysis 

Having been affected by the Russo-Ukrainian war, the energy crisis, soaring inflation, and other impacts, countries around the world have, therefore, persistently adopted interest rate hikes to cope with the context, but these measures have also seriously impacted the willingness of consumers. Since the second half of 2022, the United States and Europe began to cut consumption due to inflation, while mainland China has been affected by the epidemic control, which has, one after another, blocked out the three major locomotives of growing momentum for Taiwan’s export. Consequently, its export value fell below US$40 billion last September and dropped even further, to $35.7 billion, in December. Even though inflation has already peaked, worldwide central banks have not yet changed their policy of raising interest rates, and it is believed that the situation of high-interest rates and low consumption may have to last longer.

As mobile communications and personal computers (PC) are currently the two major application markets for the PCB industry of Taiwan, it would, therefore, be hard for them to have any growing momentum under such unfavorable factors within the general environment. Furthermore, the incident that occurred at the end of last year at the Zhengzhou factory of Foxconn gave a further blow to the shipment of new iPhones causing it to stagnate and intensifying the situation. Besides, the incident resulted in a rare recession in Taiwan’s PCB industry, which would usually experience peak shipments in Q4. As for the outlook for 2023, it appears it may develop into the scenario of “squatting first before jumping” as viewed in the current situation. It is also believed that the downturn in the market may continue until the first half of the year and that trade can only count on support from several high-end products e.g., the ABF board, the ADAS, and servers. In the second half of the year, it is expected that business prospects should gradually recover as the demands recover. Coupled with the effect of the base period, it is likely there will be a slight growth in the trade. On the other hand, substrates, electric vehicles, 5G mobile phones, servers, satellite communications, and others are going to be crucial applications for industrial growth this year. As viewed, it is estimated that the PCB industry of Taiwan should be able to sustain its growth, but that the growth rate will be lower than that of 2022, and that the growth rate of 2023 should be kept at 1.6%.