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Taiwan’s Industrial Economics and Knowledge Research Center (IEK) has raised its prediction for the country’s industrial output in 2014. The IEK announced its revised prediction on Wednesday.
The IEK made the revisions in light of an improved economic outlook both in Taiwan and overseas. It also took into account production levels that have proven so far to be higher than levels in the same quarter last year.
The new figures predict a 3.19% increase in industrial production. That’s nearly a tenth of a percentage point higher than the original prediction.
Taiwan’s semiconductor industry is set to benefit from a warming US economy and continued economic recovery in Europe. These two trends will give end consumers around the world greater spending power.
In all, Taiwanese semiconductor production is expected to see double-digit growth. This growth will secure Taiwan’s place as the world’s second-largest producer of semiconductors behind the US.
At the same time, however, the IEK warned about the economic impact of a free trade agreement between Mainland China and South Korea that will be signed at the end of the year.
The IEK said that the impact of the agreement, combined with a lack of progress in cross-strait trade talks, could see Taiwan’s industrial output decrease by 1.59 to 3.85 percentage points.
Peter Chen, a manager at IEK, said that there are several ways that Taiwanese manufacturers can brace for the impact that the agreement with have.
"Besides speeding up trade discussions with Mainland China, we should also deal with the China-South Korea free trade agreement by investing in research and development," said Chen.
"The only way to ensure a competitive advantage in the long run is to increase the strength of our products, including through product differentiation and raising our products’ value," he said.
The IEK predicts that the new agreement will hit Taiwan’s chemical industries, including the petrochemical and rubber industries, especially hard.