British-based banking group Barclays PLC stuck to it forecast of higher-than-average growth for Taiwan’s economy this year, thanks to an investment rebound and improving consumption, despite a disappointing first quarter of the year.
“We maintain our 4 percent growth forecast for 2013, although the soft start to the year has created some downside risks,” Leong Wai Ho (梁偉豪), a Singapore-based Barclays economist, wrote in a research note on Friday.
The figure is higher than the 3.6 percent forecast by the government and the 3.7 percent expected by the Taiwan Institute of Economic Research (台灣經濟研究院).
Leong forecast that the nation’s business climate will be reinforced by a trend of returning investments from local companies.
One example being Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chip manufacturer, which recently announced that it will increase its capital expenditure this year for production technology upgrades, the economist said.
“Furthermore, we expect consumption to improve in the coming quarters, supported by a low unemployment rate, falling inflation, a resilient housing market and equity market gains,” Leong added.
According to government data released on Tuesday last week, the nation’s GDP grew just 1.5 percent year-on-year in the first quarter, well below Barclays’ forecast of 3.8 percent and the government’s original projection of 3.3 percent.
The key factors behind the soft patch in the first quarter were weak private consumption and a contraction in net exports, Leong said.
He said that the drop in net exports was due to strong imports, which were related to an 11 percent year-on-year rebound in investment.
From an industry value-added perspective, the slowdown in growth was led by manufacturing, which in part reflected the impact of refinery maintenance and a drop in prices in the petrochemicals industry, he added.
While the production of electronics also paused in the first quarter, Leong said he expected the global launch of Taiwanese smartphone maker HTC Corp’s (宏達電) new flagship smartphone last month to revive the technology supply chain in the second quarter.