The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday slightly raised its forecast for the nation’s GDP growth this year to 2.08 percent, from a previous projection of 2.04 percent, as exports regain growth momentum after slowing in the second quarter.
The planned launches of next-generation devices by global technology brands are expected to ramp up business for local firms in their supply chains, with the benefit likely more evident next quarter, the Taipei-based think tank said.
“Despite the upward revision, the nation’s economy continues to have difficulty casting off weak growth as domestic demand flounders and global uncertainty lingers,” TIER economist Gordon Sun (孫明德) told a news conference.
Major smartphone brands are expected to introduce new models next month, followed in September by Apple Inc’s next-generation iPhone, which will reportedly feature a new design to mark the product’s 10th anniversary, he said.
That would give the manufacturing industry a boost, as local firms supply Apple with chips, touchpanels, camera lenses, batteries, casings and other critical components, he added.
Shipments might start to gain traction this quarter and build up toward the holiday season next quarter, explaining an improvement in business sentiment among local manufacturers last month after five consecutive months of declines, Sun said.
The sentiment gauge last month rose 1.02 points from May to 96.49, with electronics firms the most upbeat about business outlook, a survey by the institute showed.
Exports, which constitute about 70 percent of GDP, might grow 8.4 percent this year, while imports might expand 9.6 percent, Sun said.
Stagnant oil prices might limit growth for shipments of mineral, plastic and basic metal products, he added.
The institute also raised its estimate of capital formation for this year to a 2.4 percent increase, as the government has become more proactive in improving infrastructure, Sun said.
However, the think tank expects private investment to moderate to an advance of 2.15 percent this year, down 0.03 percentage points from a projection in April, as local semiconductor firms last month slowed their pace of capital equipment purchases.
Retail sales have been weaker than expected this year compared with last year, Sun said, citing a continuing decline in the number of Chinese tourists.
However, rallies on the TAIEX have helped boost the wealth effect and mitigate the pain of shrinking retail sales, he added.
Local shares might trade in a tight range moving forward, as foreign funds have stopped adding positions, but have not yet taken profits, Sun said.
A lack of market direction might help keep the New Taiwan dollar at current levels with a bias to soften against the greenback once the US Federal Reserve offloads assets to normalize its monetary policy, he said.
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