The manufacturing sector is expected to see growth of 3.49 percent this year, as rising commodity prices, including crude oil and steel, help lift the local petrochemical and base metals sectors, the Industrial Economics and Knowledge Center (IEK, 產業經濟與趨勢研究中心) said yesterday.
The forecast represented an upward revision from the 3.25 percent annual growth estimated by the Hsinchu-based researcher in October last year.
IEK expects the manufacturing sector, a key pillar of the nation’s economy, to generate output of NT$18.93 trillion (US$640.39 billion), up from NT$18.29 trillion last year.
“Without new growth catalysts, we believe 3.49 percent growth is quite good, given that last year’s base was very high,” IEK policy and regional research division deputy director Peter Cheng (陳志強) said.
The forecast did not factor in China’s recent clampdown on factories with toxic emissions, he said.
“It is a risk, but it is premature to say how large the effect is likely to be. Whether Beijing’s drive against pollution will expand to the hinterlands and southeastern coastal provinces remains to be seen,” he said.
The information and communications technology (ICT) sector, the largest contributor to the manufacturing sector, is expected to see output rise 3.96 percent year-on-year to NT$6.65 trillion this year, unchanged from the previous estimate.
“Lukewarm sales of the iPhone X could continue to weigh on the performance of Apple Inc’s local suppliers. We had expected the low sales as the high price tag was expected to scare away some iPhone fans,” Cheng said.
Semiconductor companies are expected to see a stellar 7 percent year-on-year growth in production value this year, offsetting a 1.8 percent slump in LCD manufacturers, IEK said.
Semiconductor firms account for about 40 percent of the manufacturing sector’s total output, while LCD makes up between 20 and 25 percent.
The petrochemical sector is forecast to grow 4.88 percent year-on-year to NT$4.68 trillion this year, 0.75 percentage points higher than the previous estimate of 4.13 percent, the center said.
“Global crude oil prices are likely to stage a rebound this year, providing a boon to local petrochemical companies,” Cheng said.
Global crude oil prices are forecast to climb 6.31 percent to US$57.3 a barrel this year from US$53.9 last year, IEK said.
The base metals and machinery sector is forecast to see production value grow 2.42 percent year-on-year to NT$5.28 trillion, up from the 2.18 percent growth estimated three months ago, thanks to steep cuts in steel capacity and inventory digestion from China, IEK said.
As for the livelihood sector — including the textile and tourism industries — output is expected to grow 1.86 percent annually to NT$2.33 trillion, compared with a previous estimate of 1.83 percent growth, as the government’s planned 3 percent wage hikes for civil servants could spread to the private sector and boost consumption, Cheng said.
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