CLSA Ltd Asian investment bank yesterday made very bullish predictions for the economy over this year, saying the nation's gross domestic product (GDP) would grow 4.5 percent during this year and rise a further 6.5 percent next year. Conversely, the government's Directorate General of Budget, Accounting and Statistics (DGBAS) is not so optimistic, forecasting only 3.6 percent growth for the year.
"Our head of research, Dr. Jim Walker, is very bullish on the Taiwan economy in 2003," Alan Chen (陳斌), manager of CLSA's Taiwan branch office, said at a press conference yesterday. Chen said that the sentiment on the ground in Taiwan was "too bearish." The growth would come on the back of a recovery in Taiwan's tech sector, prompted by increased computer hardware sales in the US as consumers and corporations replace equipment in the second half of the year.
Since Thursday, CLSA has been hosting an international forum called "The Vanishing Straits," which looks at Taiwan's investments in China. Officials from leading tech companies like Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Realtek Semiconductor Corp (瑞昱半導體), Compal Electronics Inc (仁寶電腦) and Lite-On Technology Corp (光寶科技) spoke at the forum.
Taiwan's tech sector is expected to perform particularly strongly in 2003, especially in the second half. Chen said that the PC industry would see growth of 9.7 percent this year. Tech research firms like US-based Gartner Dataquest predict growth of only 7 percent in the PC market in 2003, but other investment firms are as optimistic as CLSA. Only this week, Merrill Lynch & Co forecast an increase in computer chip sales of 12 percent over the next twelve months.
Taiwan's stock market, the TAIEX, should perform well, the analysts said. "People looking for growth should look at Taiwan, especially TSMC," CLSA technology investment analyst Cheng Ming-kai (鄭 凱) said. TSMC is the world's largest manufacturer of made-to-order computer chips. CLSA has predicted the TAIEX will top 5,300 points by the end of the year. At the close of trading yesterday the index stood at 4,907.
The performance of the local stock market is drawing interest from overseas. "There is lots of foreign interest in Taiwan shares," said Peter Sutton, head of research at CLSA. Sutton said that foreign investors are turning to Taiwan as "the door to China" against a background of poor economic performance in the US and Europe. China posted around 8 percent GDP growth last year while the developed world struggled to achieve any growth at all.
Taiwan's tech sector has benefited from investing in manufacturing plants in China where labor costs and overheads are much cheaper than in Taiwan. This has made Taiwan's tech companies more efficient and profitable, said Cheng.
Local investors poured an estimated US$66.8 billion into China by the end of 2002, Central Bank of China (CBC) Governor Perng Fai-nan (彭淮南) said on Thursday.
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