Taipei, Oct. 28 (CNA) The production value of Taiwan’s manufacturing sector is expected to grow again next year, rising by more than 5 percent in 2024 as inventory adjustments come to an end, inflationary pressure eases and emerging technology applications increase, the government-sponsored Industrial Technology Research Institute (ITRI) forecast earlier this week.
ITRI’s Industrial Economics and Knowledge Center (IEK) forecast in a report that the output of the local manufacturing sector will hit NT$23.38 trillion (US$724 billion) in 2024, up 5.49 percent from a year earlier.
The expected growth will reverse a forecast 10.68 percent year-on-year decline in 2023 made amid weakening global demand at a time of high inflation and aggressive rate hikes by the major central banks in the world, the IEK said.
The IEK said the four major segments of the local manufacturing sector — information and electronics, chemical, light industries, and metal and electric machinery — are expected to suffer a year-on-year fall ranging between 1 percent and 14 percent in 2023.
However, the situation in 2024 is expected to be different. The IEK said while the purchasing managers’ index (PMI) of several major economies largely remained in contraction, the index moved higher in recent months, indicating a recovery and reviving global demand.
In addition, inventories in the local manufacturing sector have gradually returned to normal, paving the way for a comeback in production among Taiwanese manufacturers next year, according to the IEK.
It said the information and electronics segment is expected to see output rising 7.57 percent from a year earlier in 2024. Growth of the chemical segment, light industries and metal and electric machinery segment is expected to hit 4.07 percent, 3.97 percent and 3.93 percent, respectively.
The IEK said the information and electronics segment will likely get a boost in demand from end-users for smartphones and PCs, while solid demand for data centers and servers and rising applications in emerging technologies such as 5G and automotive electronics is expected to lend more support.
As for the chemical segment, the IEK said, a cut in production by the Organization of Petroleum Exporting Countries and its allies and a war between Israel and the militant group Hamas are expected to boost international crude oil prices.
With the Paris Olympics in 2024, the textile industry is expected to see demand for sports outfits rising, while a recovery in consumption and tourism in the post COVID-19 era is expected to strengthen the light industry segment, the IEK said.
Semiconductor suppliers worldwide are expected to expand their production to push up demand for equipment, and smart manufacturing and renewable energy and aerospace will also boost demand for equipment so the local metal and electric machinery segment will become the beneficiary of such a trend in 2024, the IEK added.
However, the IEK warned a restructuring of supply chains amid continuing tensions between the United States and China is expected to lead foreign investors to relocate their investments from China to India, Vietnam, Thailand and Mexico, which could pose challenges for Taiwan’s manufacturers.
In addition, growing geopolitical tensions, regional military conflicts, China’s property market weakness and volatile fluctuations in commodity prices are expected to create more uncertainties for the global economy, the IEK said.
