The government yesterday raised its forecast for this year's economic growth to 5.46 percent after third-quarter growth hit a three-year high, driven by robust electronics exports.
The strong economic growth and the rising risk of inflation encouraged speculation that the central bank will raise benchmark interest rates next month, analysts said.
Third-quarter GDP increased 6.29 percent from last year, exceeding the 4.47 percent estimate in August.
The boost was mostly a result of strong exports to emerging markets such as China and India, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said.
The results outshone most economists' expectations, including Lehman Brothers' forecast of 5.4 percent and Citigroup's 5.1 percent.
"We are surprised by the export contribution to Taiwan's GDP. We believe the central bank's decision will reflect this [strong economic data]," said Cheng Cheng-mount (
Exports contributed 3.1 percentage points to the quarter growth figure, compared with the 1 percentage point the DGBAS said it had expected.
As economic growth in the third quarter was so strong, the central bank will have more leeway to tighten its monetary policy amid greater inflation risk, Cheng said.
The DGBAS yesterday forecast that GDP would rise to 5.46 percent this year at an annual rate, from its previous estimate of 4.58 percent. It also raised its estimate for the annual increase in the consumer price index (CPI) to 1.65 percent from 1.48 percent for this year.
The central bank may raise key interest rates by another 25 basis points in the upcoming quarterly meeting, following 12 straight quarterly hikes, Cheng said.
The rediscount rate, which the central bank charges local commercial banks for loans, rose to 3.25 percent.
"More and more economic data is on the side of the central bank, which hopes to increase interest rates to boost the real rate to a neutral level," said Liang Kuo-yuan (
The good news dispelled worries that economic growth could be cooling, Liang said, but added that inflationary pressure was rising and capital outflow was a lingering problem.
Liang said he did not rule out the possibility of a 0.25 percentage point hike, compared with his previous forecast of 0.125 percentage points.
Looking into the final quarter of the year, DGBAS forecast GDP would expand 5.43 percent on the back of sustaining export momentum and stable private consumption.
The government agency also raised its estimate for next year's annual economic growth to 4.53 percent from its 4.51 percent estimate. It also said CPI could increase 1.48 percent rather than 1.46 percent.
LONG FLIGHT: The jets would be flown by US pilots, with Taiwanese copilots in the two-seat F-16D variant to help familiarize them with the aircraft, the source said The US is expected to fly 10 Lockheed Martin F-16C/D Block 70/72 jets to Taiwan over the coming months to fulfill a long-awaited order of 66 aircraft, a defense official said yesterday. Word that the first batch of the jets would be delivered soon was welcome news to Taiwan, which has become concerned about delays in the delivery of US arms amid rising military tensions with China. Speaking on condition of anonymity, the official said the initial tranche of the nation’s F-16s are rolling off assembly lines in the US and would be flown under their own power to Taiwan by way
OBJECTS AT SEA: Satellites with synthetic-aperture radar could aid in the detection of small Chinese boats attempting to illegally enter Taiwan, the space agency head said Taiwan aims to send the nation’s first low Earth orbit (LEO) satellite into space in 2027, while the first Formosat-8 and Formosat-9 spacecraft are to be launched in October and 2028 respectively, the National Science and Technology Council said yesterday. The council laid out its space development plan in a report reviewed by members of the legislature’s Education and Culture Committee. Six LEO satellites would be produced in the initial phase, with the first one, the B5G-1A, scheduled to be launched in 2027, the council said in the report. Regarding the second satellite, the B5G-1B, the government plans to work with private contractors
‘NARWHAL’: The indigenous submarine completed its harbor acceptance test recently and is now under heavy guard as it undergoes tests in open waters, a source said The Hai Kun (海鯤), the nation’s first indigenous defense submarine, yesterday began sea trials, sailing out of the Port of Kaohsiung, a military source said. Also known as the “Narwhal,” the vessel departed from CSBC Corp, Taiwan’s (台灣國際造船) shipyard at about 8am, where it had been docked. More than 10 technicians and military personnel were on deck, with several others standing atop the sail. After recently completing its harbor acceptance test, the vessel has started a series of sea-based trials, including tests of its propulsion and navigational systems, while partially surfaced, the source said. The Hai Kun underwent tests in the port from
MISSION: The Indo-Pacific region is ‘the priority theater,’ where the task of deterrence extends across the entire region, including Taiwan, the US Pacific Fleet commander said The US Navy’s “mission of deterrence” in the Indo-Pacific theater applies to Taiwan, Pacific Fleet Commander Admiral Stephen Koehler told the South China Sea Conference on Tuesday. The conference, organized by the Center for Strategic and International Studies (CSIS), is an international platform for senior officials and experts from countries with security interests in the region. “The Pacific Fleet’s mission is to deter aggression across the Western Pacific, together with our allies and partners, and to prevail in combat if necessary, Koehler said in the event’s keynote speech. “That mission of deterrence applies regionwide — including the South China Sea and Taiwan,” he
RSS