The local economy probably exited the deepest recession on record last quarter as the global recovery spurred demand for the country’s semiconductors and mobile phones, according to a survey of economists.
After contracting for the previous five quarters, GDP would increase 7.1 percent in the three months through December from a year earlier, according to the median of the Bloomberg News survey’s nine estimates.
The Directorate-General of Budget, Accounting and Statistics will release the figure after the stock market closes today.
“Taiwan is ‘out of the woods’ for as long as the global economy is, and is particularly benefiting from a surge in growth in China,” said Dariusz Kowalczyk, chief investment strategist in Hong Kong at SJS Markets Ltd.
“Since inflation is bound to return, we expect the central bank to begin raising rates in April, with 50 points of tightening likely in 2010,” Kowalczyk said.
The central bank kept interest rates unchanged at a record-low 1.25 percent on Dec. 24, after slashing them by 2.375 percentage points from September 2008 to this month to revive the economy.
Taiwan’s exports to China, its biggest trading partner and No. 1 overseas investment destination, soared 187.8 percent last month from a year earlier, after a 96.7 percent gain in December. Shipments to the US, the second largest export market, rose 13.7 percent last month after increasing 4 percent in December.
“Local exporters have been reporting good sales figures in the fourth quarter because of rising demand from overseas,” said Lee Ming-han (李明翰), an economist at Bank SinoPac (永豐銀行) in Taipei. “Domestic consumption also improved on a falling jobless rate and gains in the stock markets.”
The risks to Taiwan “are centered around the global outlook, which is strong only in the short term,” Kowalczyk said. “By late 2010 and early 2011 we see a double dip in G3 economies, which will trigger a slowdown. This is bound to hit Taiwanese exports and reduce its growth rate in 2011.”
Analysts said the stock market, which gained more than 200 points in the final two trading days before the Lunar New Year, might rise today, based on strong showings in global stock markets last week and the present domestic and international economic and political situations.
The US Federal Reserve’s raising of discount rates by 0.25 percent to banks for direct loans on Feb. 18 will have only a small negative impact on Taiwanese shares, analysts said yesterday.
Several factors are expected to contribute to a bullish market in the near term, including better-than-expected financial reports to be issued later in the year by Taiwanese and US corporations.
In addition, optimism over the signing of a proposed economic cooperation framework agreement, favorable government policies for allowing flat panel makers to invest in China, strong exports and improved industrial production figures will add to the bullishness of the market, analysts said.
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