Taiwan’s economy, while gradually recovering from the global economic downturn, is expected to show moderate growth this year as export orders, boosted by China’s strong recovery, are expected to rise about 10 percent, experts and officials said on Monday.
They said the country would see positive growth this year, not only because of the low base last year, but also because of some fundamental factors such as strong inventory buildup.
Polaris Research Institute (寶華綜合經濟研究院) president Liang Kuo-yuan (梁國源) said the global economic recovery is mostly led by the Asian emerging economies — particularly China — which will benefit Taiwan’s exports.
With the economic downturn approaching an end, manufacturers have digested most of their inventories, so they need to build up their stocks again, Liang said.
Ray Chou (周雨田), a research fellow at Academia Sinica’s Institute of Economics, said that during periods of economic recovery, manufacturers need to rebuild their inventories while meeting existing orders, so the boosting effects from rebuilding inventories sometimes are underestimated.
Chou said that if the momentum of inventory buildup is strong, the economy would show a better performance than expected this year.
Taiwan is expected to see a negative economic growth rate for last year of 2.53 percent, while the growth rate this year is expected to be 4.39 percent, the Cabinet-level Directorate General of Budget, Accounting and Statistics (DGBAS) said.
While the growth forecasts from private research institutes vary from 4.21 percent to 4.73 percent, the national development plan approved by the Cabinet on Dec. 24 set the target for economic growth this year at 4.8 percent.
Meanwhile, with Asia expected to lead the global economic recovery, and with China — Taiwan’s biggest source of export orders — expected to surpass Japan to become the world’s second-largest economy, Taiwan’s foreign trade will be boosted, trade officials said.
Huang Chih-peng (黃志鵬), director-general of the Bureau of Foreign Trade under the Ministry of Economic Affairs, said that both exports and imports are expected to show 10 percent growth this year.
In addition to orders from China, which will gradually increase as its economy improves, Huang said that more than NT$1 billion (US$31.3 million) in business opportunities from an international sourcing event in March are likely to be realized, which will affect export figures this year.
The US, which is expected to become the second-strongest area of recovery, will see more obvious signs of growth in the second half of this year, trade officials said.
Taiwan’s exports were down 24.1 percent in the first 11 months of last year — which is even larger than the 16.9 percent negative export growth seen during the Internet bubble burst of 2001.
However, export orders in November picked up sharply — rising 37.11 percent from the same month of the previous year — with the total value of orders from China and Hong Kong increasing by 70 percent.
However, as depreciation of the US currency is expected to continue, the New Taiwan dollar will be under more pressure to go up, which will reduce export competitiveness, Huang said. Unemployment would still be an issue, an academic said.
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