Taiwan, South Korea GDP growth forecasts raised by IMF amid brisk chip sales and strong US dollar

Brisk global sales of semiconductors and weakening currencies against the US dollar have nudged 2022 economic growth forecasts higher for Asian tech manufacturers South Korea and Taiwan, analysts said on Wednesday.

The International Monetary Fund (IMF) on Tuesday forecast that Taiwan’s gross domestic product (GDP) will grow 3.3 per cent this year, up from a prediction of 3.2 per cent in April. For South Korea, the Washington-based institution forecast 2.6 per cent growth, slightly higher than the 2.5 per cent figure cited half a year ago.

Both East Asian economies will be buoyed by sales of chips to developers of 5G smartphones, modern vehicles like electric cars and high-powered computing devices, even as demand for more common consumer gear falters.

“This year semiconductors are not doing that bad,” said Tony Phoo, a Taipei-based economist with Standard Chartered Bank. “Korea is largely dominated by memory chips, and for everyday things from cars to washing machines it all comes down to memory chips.”

Contract chip maker Taiwan Semiconductor Manufacturing Co., often described as a bellwether for global demand in consumer electronics, posted NT$218.1 billion (US$6.8 billion) in August sales and NT$208.2 billion in sales the following month, both up by double-digit percentages over the same months last year.