Taiwan’s export-focused economy could expand at a pace of 4.1 percent next year driven by demand for new-generation electronics, but the European debt crisis is expected to continue to rock the local bourse, SinoPac Financial Holdings Co (永豐金控) said yesterday.
“The nation’s GDP might maintain moderate growth of 4.1 percent next year, although fiscal tightening by governments in the US and Europe will weaken growth momentum,” SinoPac Financial chief economist Jack Huang (黃蔭基) told a media briefing.
The forecast was roughly in line with the government’s estimate last month of a 4.19 percent expansion next year, but it is more optimistic than Cathay Financial Holding Co’s (國泰金控) estimate of 3.7 percent growth.
Australian banking group ANZ said in a recent report it expects Taiwan’s economy to expand by 4 percent next year, with the global cycle toward reductions in technology stock ending in the second quarter.
All the institutions agreed that there would be an economic slowdown at home and abroad, and that emerging economies in Asia could help buffer the impact.
Exports, which are forecast to grow by 13.5 percent this year, are likely to see a 6.8 percent increase next year, Huang said.
The contribution from domestic demand would be limited, although consumer spending remains resilient thus far, Huang said.
SinoPac Financial expects Taiwan’s major trading partners to show positive economic cyclical movements next year, with China’s GDP growth estimated at about 8.1 percent, that of the US at 1.6 percent, Europe at 0.4 percent and Japan at 2.6 percent, the report said.
Global smartphone shipments could gain 40 percent from this year to 645 million units next year, while the laptop and LED lighting sectors might see a rebound on improving product quality and lower prices, the report said.
The TAIEX, which has lost more than 20 percent this year, will remain volatile next year as a huge amount of sovereign debt is due to mature between February and April, driving investors to the sidelines, Huang said.
Against this backdrop, the central bank is likely to keep the benchmark rediscount rate unchanged at 1.875 percent later this month and all of next year, Huang said.
Raymond Yeung (楊宇霆), an ANZ economist based in Hong Kong, expects the monetary policymaker to resume 12.5 basis-point rate increases in June next year after the economy shows clear signs of improvement.
“Given our projected timing of an economic recovery, we think the central bank will resume the rate normalization process in mid-2012, ending the year with a rediscount rate at 2.25 percent,” Yeung said in the report.