DECEMBERASIA BUSINESS OUTLOOK8NEWSROOMJAPANESE CORE CONSUMER INFLATION ACCELERATING AT A RAPID PACETaiwan's economy is poised for stronger-than-expected growth in 2024, fueled by a boom in demand for technology products driven by advancements in artificial intelligence. The Directorate General of Budget, Accounting, and Statistics has revised the gross domestic product (GDP) growth forecast to 4.27 percent, up from the 3.9 percent predicted in August. This marks a sharp rebound from the modest 1.31 percent growth recorded in 2023, signaling a revitalized economic trajectory.The island, which hosts Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the world's largest contract chipmaker, continues to play a critical role in the global tech supply chain. Companies like Apple and Nvidia depend on Taiwan for high-tech components, and the ongoing AI surge has bolstered export demand, driving growth in the technology sector.Exports are now projected to grow by 5.98 percent in 2025, reflecting steady demand for Taiwan's products. While this is a slight slowdown compared to the earlier forecast of 8.71 percent for 2024, it underscores the enduring strength of Taiwan's trade-oriented economy. The island remains a vital hub for cutting-edge semiconductor and AI-related manufacturing.Inflation is expected to remain under control, with the consumer price index (CPI) forecast at 1.93 percent in 2025, slightly below the central bank's target of 2 percent. This marks a slight increase from the 1.85 percent forecast for 2023, indicating stable price levels as Taiwan's economy expands.In addition, the statistics office revised the third-quarter economic growth figure for 2024 upward to 4.17 percent from an initial estimate of 3.97 percent. This adjustment reflects the island's accelerating economic activity, driven by its strategic position in the global technology supply chain and the growing AI-related demand. Core consumer inflation in Japan's capital accelerated in November and stayed above the central bank's 2 percent target in a sign of broadening price pressure, data showed on Friday, keeping alive market expectations for a near-term interest rate hike.The yen rose against the dollar after the data, as market players braced for the possibility the Bank of Japan (BOJ) will raise short-term interest rates from the current 0.25 percent at its next policy meeting in December.The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.2 percent in November from a year earlier, exceeding a median market forecast for a 2.1 percent gain and accelerating from a 1.8 percent increase in October.Another index that strips away both fresh food and fuel costs, which is closely watched by the BOJ as a better gauge of demand-driven inflation, rose 1.9 percent in November from a year earlier after a 1.8 percent increase in October. The data for Tokyo, which is considered a leading indicator of nationwide price trends, showed households hit by rising rent, utility bills and food costs.Service-sector prices rose 0.9 per cent in November from a year earlier after a 0.8 per cent gain in October, underscoring the BOJ's view that prospects of sustained wage gains are prodding firms to charge more for services. The dollar fell 0.3 percent at 151.125 yen after the data's release. Just over half of economists polled by Reuters expect the BOJ to raise rates again at its Dec. 18-19 meeting. TAIWAN'S ECONOMY SET TO OUTPACE GROWTH PROJECTIONS OWING TO AI BOOM
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