Jan 31, 2013

Taiwan: Government To Raise Economic Growth Forecast

Island country's fourth quarter expanded faster than expected, resulting in more positive outlook of economy and raised growth outlook.

Below is an article published by South China Morning Post:



Taiwan raised its economic growth forecast for this year on Thursday, after the fourth quarter expanded faster than expected and posted its best growth in five quarters on improved demand for the island’s electronics exports and stronger consumption.

The government raised its growth forecast for the full year to 3.53 per cent from a previous 3.15 per cent, but it warned that global economic growth momentum remained weak.


“All economic indicators point to a strong recovery (for Taiwan),” the agency said, adding that global economic growth momentum remains weak.


The trade-reliant island’s growth has been steadily picking up and largely propelled by improving demand for technology goods globally and exports to China, its largest trading partner.


The economy grew a preliminary 3.42 per cent in the fourth quarter of last year year on year, the statistics agency said, above the median forecast in a Reuters poll for 3.10 per cent growth, and rose a seasonally adjusted 1.47 per cent from the previous quarter.


The last time the island’s economy expanded at a faster pace was in the third quarter of 2011, when GDP growth was 3.53 per cent, according to previously announced data.


The statistics office raised its inflation forecast for this year to 1.31 per cent, from a previously forecast 1.27 per cent. But analysts said inflation was mild and unlikely to prompt a change in interest rates.


“We don’t expect the central bank to put forward any monetary policy changes until Q4 at the earliest; the economy is not good enough to raise rates yet,” said Scott Chen, an economist with Sinopac Commercial Bank in Taipei.


“There will be more uncertainties in H2 though, if China pushes out reforms to regulate the over-heating property market.”


The central bank left its benchmark discount rate unchanged at 1.875 per cent at its last meeting in December, saying economic growth was expected to be mild this year and inflationary pressures were easing.


Taiwanese firms are the main suppliers to most of the world’s top tech brands, including Apple, Dell and Nokia. The heavy reliance on electronics exports makes the island’s economy especially vulnerable to swings in external demand.