FILE PHOTO: People wearing face masks to prevent the spread of the coronavirus disease (COVID-19) and carrying umbrellas walk on the street during a rainy day in Taipei, Taiwan, November 26, 2021. REUTERS/Annabelle Chih
TAIPEI: In the short term, there will only be a moderate impact on Taiwan’s economic growth from the war in Ukraine, the island’s central bank said on Friday (Mar 11), adding it also saw a limited effect on supply chains for the crucial semiconductor industry.
In a report to parliament for lawmakers to discuss on Monday, the central bank noted that Taiwan’s trade with Russia was small, worth only $4.94 billion for the last three years combined, or 0.72per cent of the island’s overall trade.
“The economic and trade relationship between Taiwan and Russia is not close, and the exposure to Russia and Ukraine is not large,” it said. “The short-term impact on economic growth is still moderate.”
The bank predicted in December that 2022 gross domestic product (GDP) would expand 4.03 per cent, compared to a previous prediction of 3.45 per cent. It is due to give its next forecast at its quarterly meeting on Thursday.
Still, both Russia and Ukraine produce raw materials such as nickel, neon and other metals and gases that are used in electric vehicles, stainless steel and chips, the bank said.
“After the military conflict between Russia and Ukraine, the market was for a time concerned about the supply chain for related industries,” the bank said.
“However, Russia and Ukraine are not the main import sources of the above-mentioned raw materials in Taiwan, and Taiwan has sufficient stocks of related raw materials and diverse supply sources. It is expected that in the short-term the supply chain impact will be small.”
Taiwan is a major chip producer, and its companies have been crucial to resolving a global shortage of them which has in some cases caused auto production lines to suspend operations.
Taiwan chipmaker United Microelectronics Corp told Reuters it did not expect a halt in neon production in Ukraine, a major supplier of the gas, to affect its operations in the near term as the company “has access to alternate supplies”.
“We continue to monitor the situation closely,” it added.