Industrial activity drops again in December

Industrial output decreased 4.0% year on year in December (November: -2.5% yoy). December's weakening was due to deteriorations in manufacturing and water supply output. In contrast, electricity and gas supply output rebounded. December’s disappointing manufacturing data was reportedly due in part to shortages of raw materials for AI server production. As a result, industrial production has now fallen for 19 straight months, and was down over 12% in annual terms over 2023 as a whole. On a monthly basis, factory output fell 1.9% in seasonally adjusted terms in December, which was greater than November’s 0.2% fall and marked the worst result since April.

Rising demand for AI and cloud applications, tech companies’ new product launches, and a low base effect should see Taiwan’s industrial production return to growth in 2024. However, tight monetary policy in developed markets, China’s shaky economy and disruptions to global shipping pose downside risks.

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