Thu, Jun 26, 2014 - Page 13 News List

Institute lifts GDP growth forecast

GAINING CONFIDENCE:Taiwan’s GDP is expected to be boosted by consumer spending as well as private investment, Yuanta-Polaris Research Institute said

By Crystal Hsu  /  Staff reporter

Yuanta-Polaris Research Institute (元大寶華研究院) yesterday raised its GDP growth forecast this year to 3.18 percent from the 2.88 percent predicted in March, as the economic recovery proved stronger in the first quarter and momentum may extend into the second half of the year.

“The nation’s economy is emerging from its anemic recovery, and shows signs of stable and concrete pickup though the pace remains slow compared with long-term historic trends,” the think tank’s chairman, Liang Kuo-yuan (梁國源), told a media briefing.

The upward revision has more to do with an improving job market and consumer confidence despite mixed developments abroad, Liang said, adding that emerging economies are disappointing, while high-income countries are gaining speed.

The nation’s unemployment rate dropped to 3.85 percent last month, the lowest since May 2008, and the local bourse consolidates around six-year highs, both of which are favorable for consumer confidence and income increase, the economist said.

Domestic demand is expected to boost GDP readings by 2.29 percentage points this year, led by consumer spending and private investment, the institute’s quarterly report said.

Major bellwethers this quarter lent support to an optimistic outlook and are outperforming the values in the preceding quarter, Liang said, although the second quarter is widely considered a slow season for the technology sector.

Employers in most sectors have indicated plans to increase headcounts, while foreign fund inflows are boosting local shares, Liang said.

Private investment has risen for two consecutive quarters with main telecommunications operators to increase capital expenditures by 7.7 percent this year by building 4G-LTE networks, he said.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, accounted for more than 50 percent of private investment, suggesting strong demand for semiconductors, but an uneven recovery for different industries.

TSMC is upbeat about its business outlook, meaning electronics firms will likely put up strong showing as well, especially companies that manufacture smartphones, tablets and laptops, Liang said.

If TSMC is taken out of the picture, private investment declined for three quarters running in the first quarter, reaffirming a need for export diversification to make the nation less vulnerable to global technology cycle volatility, the economist said.

Against this backdrop, the central bank may keep interest rates unchanged after it holds its quarterly board meeting today, Liang said.

“The economy is not strong enough for monetary tightening though inflationary pressures are emerging,” he said, adding that inflation pressures may deepen, if unrest in Iraq worsens and disrupts its oil production.

This story has been viewed 1643 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top