TAIPEI (Taiwan News) — German businesses remain committed to staying in Taiwan, despite a relatively weak economic outlook for 2023.
Alexander Hirschle, Taiwan and Philippines Asia-Pacific Director of Germany Trade & Invest, said Taiwan businesses should “fasten their seatbelts” for at least the first half of 2023, in contrast with strong growth results in 2022. Hirschle made the comments at the German Trade Office's (GTO) annual presentation of their economic outlook and business confidence survey, released on Thursday (Feb. 9).
Hirschle said he predicts the Taiwan economy will experience a relative dip in growth in 2023, but long-term prospects remain healthy. Weak U.S. and Chinese demand for Taiwan’s exports, low consumer confidence, and Taiwan’s aging population will all impact Taiwan’s economic performance, he said.
Hirschle said China is the “glimpse of hope” for the Taiwan economy in 2023, as an improvement in the Chinese economy would increase demand for Taiwan’s exports. “Economic activity seems to be picking up there, some GDP forecasts for China expect 6% GDP growth, double of last year,” he said.
“The bottom line is that the stagnation of exports is quite probably and realistic, (but) maybe there might be small growth if China were to really pick up rapidly and the U.S. stabilized soon,” Hirschle said.
He also said that there are positive signs coming out of the U.S., but that changes won’t come soon enough to influence Taiwan’s economic performance in 2023.
“It seems clear that an easing of interest rates in the U.S. will happen at the end of the year, or in 2024, and this will be too late to influence the demand for exports made in Taiwan positively,” Hirschle said.
Hirschle made his presentation following the results of the GTO survey, presented to a group of businesspeople and industry leaders by Executive Director of the GTO Axel Limberg on Thursday night. According to the survey, despite Hirschle’s somewhat gloomy prediction for 2023, German business confidence in Taiwan remains steady.
Director of Taiwan and the Philippines Asia-Pacific Germany Trade & Invest Alexander Hirschle speaking at the release of the GTO 2023/2023 Business Confidence Survey on Thursday (Feb. 9). (German Trade Office in Taipei photo)
Limberg said the vast majority of German companies operating in Taiwan are healthy and profitable, and that 2022 was a successful year for German businesses. “Even though 53.4% were negatively impacted during the pandemic, only a minor proportion of 5.6% damage. 20% were even able to benefit from Taiwan’s special economic conditions,” Limberg said.
Limberg said that macroeconomic challenges such as disrupted supply chains caused German businesses’ revenues to decrease slightly, and had a negative impact on business sentiment. He said that this was not only true for Taiwan, but that supply chain issues affected the global economy.
Limberg said that only 25% of German companies expect a further improvement of the economic situation in Taiwan. “This is a substantial change compared to last year when more than 60% of companies believed there would be an improvement,” he said.
Despite this, the survey also showed that 97% of German companies currently doing business in Taiwan plan to stay, and 93% said they would start the year again.
Minister of Economic Affairs Wang Mei-hua (王美花) attended the event for the third year running, and expressed her thanks to German businesses at a time of increasing cross-strait tensions. She commented that the industries of Taiwan and Germany are “highly complementary.”
She added the Ministry of Economic Affairs has five priorities going forward. “My ministry will work hard to grow Taiwan’s economy … which includes enhancing global competitiveness of industry, supporting SMEs, and the service sector, strengthening our infrastructure, and promoting investment in Taiwan,” she said.
She also said that investments from German companies, like semiconductor firm Merck’s mega site in Kaohsiung help Taiwan maintain its leading edge in the semiconductor industry.
Merck Group Taiwan’s Managing Director John Lee also spoke at the event, and was more optimistic about the prospects for Taiwan’s economy. “We are hoping that (in the fourth quarter) there will be some kind of upswing,” Lee said.
He also said that innovations in Taiwan’s two main products, semiconductors and screen technology, were helping to improve sustainability. He added his company is confident it can reduce a highly carbon emitting chemical used in the semiconductor manufacturing process by 90%. Also, innovations in areas such as electronically dimmable “smart windows” are helping Taiwan to reduce and use energy more efficiently.
