Industrial Production Yet to Impact Taiwan due to Coronavirus
2020/03/09 | By CENSTaiwan's industrial production surprised on the upside even though it continued to contract. The impact of the coronavirus has yet to be fully reflected in the data.
One important factor is that 5G infrastructure has pushed up growth in the manufacturing of integrated circuits by 30% YoY. As we have pointed out on several occasions before the outbreak of Covid-19, 5G is the key area of growth for China in 2020. We still believe 5G is very important for growth this year but it will be slower than expected due to the epidemic.
While manufacturing of integrated circuits has been strong in Taiwan, these electronic parts are unlikely to become part of the final product. Instead, inventories will build up, which will add to GDP growth, but will not count as corporate profits.
Despite the decrease, the ministry remains optimistic about the outlook for the country's manufacturing sector, citing the easing of the trade war between the United States and China and the outbreak of the COVID-19 coronavirus.
After seasonal adjustments, last month's industrial production index recorded a 4.18 percent increase month-on-month, while the manufacturing sub-index grew 5.2 percent.
In December, the industrial production index stood at 117.11, an annual increase of 5.99 percent, while the manufacturing sub- index rose 6.37 percent to 118.79, MOEA data indicated.