Taiwan’s GDP growth will accelerate next year, as major trade partners will recover further and President Ma Ying-jeou’s (馬英九) government will increase spending ahead of the year-end elections, foreign and domestic financial institutes said yesterday.
Standard Chartered Bank expects the nation’s GDP to expand 3.9 percent next year from the estimated 2.2 percent growth this year, according to a report written by the bank’s Taipei-based chief economist, Tony Phoo (符銘財).
The recent decline in public spending and investment, which Phoo said was the main reason for soft growth this year, is set to reverse next year, as the government has approved a 10 percent increase in public construction spending in its budget ahead of the nationwide “seven-in-one” elections.
Taiwan is slated to re-elect new local administrators for municipalities, counties and cities late next year and policymakers tend to adopt measures to prop up the economy and the local bourse to win votes.
In addition, an anticipated recovery in the growth of the US and China will also provide strong support for Taiwan’s GDP growth, Phoo said in the report.
Standard Chartered expects GDP growth in the US and China to pick up to 2.4 percent and 7.6 percent next year, from projected growth of 1.7 percent and 7.4 percent respectively this year.
An improving business outlook for the technology sector will lend further support as Taiwan is home to the world’s leading contract chipmakers, computer brands and critical electronic component suppliers.
“Steady global demand for tablets and handheld devices will continue to benefit local exporters of electronics and information and communication parts,” Phoo said.
The latest North American semiconductor book-to-bill ratio and global purchasing managers’ indexes bode well for capital expenditure and hiring in Taiwan’s manufacturing sector going forward, he said.
Consequently, consumer spending is set for a rebound next year, buoyed by a steady job-market recovery and optimism over household income, Phoo said.
The tourism sector is also set to benefit from growing overseas arrivals with the government soon to lift the daily limit on Chinese visitors traveling on non-group visas to 3,000 from 2,000, he said.
Fubon Financial Holding Co (富邦金控), Taiwan’s most profitable financial service provider, expects the nation’s economy to expand between 2.8 percent and 3.3 percent next year.
However, Fubon chief economist Rick Lo (羅瑋) said that emerging markets will have to cope with challenges posed by the US’ tapering of its quantitative easing (QE), which will lead to relocation of global funds and volatility in capital markets across the world.
“While private consumption in the US and Europe is recovering, Taiwan has to deal with increasing competition from Japan, China and South Korea,” Lo said at an investment forum yesterday.
Fubon forecast the New Taiwan dollar to trade in a tight range of between NT$29.3 and NT$29.8 against the US dollar following the QE exit.