Analysts forecast slight rebound in second-half GDP

The economy remained weak in June, but analysts generally believe that slipping gross domestic product growth should have hit bottom in the second quarter and will begin a modest rebound in the second half of the year.

Tigr Cheng, an economist at Polaris Securities Corp (寶來證券), said he expects June's annual consumer price index figure will show a modest uptick not so much because of price hikes, but because there were previously reductions in telecom fees and rent, which depressed the index in the past.

Cheng also anticipates solid trade surplus figures for June. "However, this is the result of a sharper drop in imports than in exports. Actually, the level of imports and exports in June should be about the same as in May," he said.

"Weak demand will continue to cause annual declines in industrial output and export orders. There probably won't be a chance for position growth in these sectors until November or December," Cheng said.

Vivian Wang, an economist at Grand Cathay Securities Corp (大華證券), anticipates another annual decline in the CPI, because there has been no major price increases thus far.

"Export orders will show a sizable year-on-year decline largely because of an extremely high base in June last year. Actually, the value of export orders over the past few months has been fairly steady," Wang said.

June economic data will be released later this month.

Many analysts have revised down their forecast for GDP growth for the second quarter to levels of virtually no growth on the year. This compares with the government's prediction in May of 3.26 percent growth. However, most believe the economy is nearing bottom and a rebound will be seen in the second half.

Chang Ming-shu, deputy head of research at Taiwan Securities Corp (台証證券), said, "Second quarter economic growth will remain weak. But I expect this to be the bottom. A gradual recovery should begin to be seen in the third and fourth quarters," Chang said.