Taiwan’s economy is likely to record mild growth of 2.86 percent next year, after expanding 1.95 percent this year, amid intensifying competition from China and South Korea, SinoPac Financial Holding Co (永豐金控) forecast yesterday.
“Taiwan’s exports will only make a very limited contribution to its GDP” this year and the next, SinoPac chief economist Jack Huang (黃蔭基) told a media briefing.
SinoPac’s GDP growth target for next year is still higher than the 2.59 percent that the Directorate-General of Budget, Accounting and Statistics predicted last week after cutting its estimate for this year to 1.74 percent.
Exports are likely to expand 3.76 percent next year, while imports may increase by 3.22 percent, leaving net exports standing at less than 1 percentage point, Huang said.
That prediction bodes ill for private investment, which could increase by just 3.97 percent next year, far slower than the double-digit expansion necessary for it to be a key driver for the economy, he added.
Huang attributed his conservative forecast to the weakening competitiveness of Taiwanese manufacturers, particularly flat-panel display and machinery tool makers, as they rapidly lose market share to rivals in South Korea and China.
“It is unfair to pin the blame solely on HTC Corp (宏達電),” even though the smartphone vendor is incurring losses this year, Huang said, adding that market competition is set to deepen, hurting the nation’s economy further.
Since, despite the advent of the Christmas season, exports are yet to emerge from contraction this quarter compared with the same period last year, Huang said annual GDP growth is unlikely to exceed 2 percent.
SinoPac Securities Investment Service Co (永豐投顧) executive vice president Sharon Lin (林秀貞) said the nation’s disappointing trade performance has little to do with the value of the New Taiwan dollar, as South Korea’s won is valued relatively more expensively than the Taiwanese currency.
SinoPac also expects the US Federal Reserve to start winding down its quantitative easing measures in March next year, a move that would raise bond yields and expectations of investment returns across the world.
“That will add volatility to global equity markets, including the local bourse,” said Chen Te-lan (陳德蘭), another senior vice president at SinoPac Securities.
Meanwhile, the TAIEX is likely to fluctuate between 8,000 and 9,250 points next year, posting a moderate daily turnover of NT$85 billion to NT$88 billion (US$2.86 billion to US$2.97 billion), Chen said.