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.
GET TO SAFETY: Authorities were scrambling to evacuate nearly 700 people in Hualien County to prepare for overflow from a natural dam formed by a previous typhoon Typhoon Podul yesterday intensified and accelerated as it neared Taiwan, with the impact expected to be felt overnight, the Central Weather Administration (CWA) said, while the Directorate-General of Personnel Administration announced that schools and government offices in most areas of southern and eastern Taiwan would be closed today. The affected regions are Tainan, Kaohsiung and Chiayi City, and Yunlin, Chiayi, Pingtung, Hualien and Taitung counties, as well as the outlying Penghu County. As of 10pm last night, the storm was about 370km east-southeast of Taitung County, moving west-northwest at 27kph, CWA data showed. With a radius of 120km, Podul is carrying maximum sustained
Tropical Storm Podul strengthened into a typhoon at 8pm yesterday, the Central Weather Administration (CWA) said, with a sea warning to be issued late last night or early this morning. As of 8pm, the typhoon was 1,020km east of Oluanpi (鵝鑾鼻), Taiwan’s southernmost tip, moving west at 23kph. The storm carried maximum sustained winds of 119kph and gusts reaching 155kph, the CWA said. Based on the tropical storm’s trajectory, a land warning could be issued any time from midday today, it added. CWA forecaster Chang Chun-yao (張竣堯) said Podul is a fast-moving storm that is forecast to bring its heaviest rainfall and strongest
TRAJECTORY: The severe tropical storm is predicted to be closest to Taiwan on Wednesday and Thursday, and would influence the nation to varying degrees, a forecaster said The Central Weather Administration (CWA) yesterday said it would likely issue a sea warning for Tropical Storm Podul tomorrow morning and a land warning that evening at the earliest. CWA forecaster Lin Ting-yi (林定宜) said the severe tropical storm is predicted to be closest to Taiwan on Wednesday and Thursday. As of 2pm yesterday, the storm was moving west at 21kph and packing sustained winds of 108kph and gusts of up to 136.8kph, the CWA said. Lin said that the tropical storm was about 1,710km east of Oluanpi (鵝鑾鼻), Taiwan’s southernmost tip, with two possible trajectories over the next one
President William Lai (賴清德) yesterday criticized the nuclear energy referendum scheduled for Saturday next week, saying that holding the plebiscite before the government can conduct safety evaluations is a denial of the public’s right to make informed decisions. Lai, who is also the chairman of the Democratic Progressive Party (DPP), made the comments at the party’s Central Standing Committee meeting at its headquarters in Taipei. ‘NO’ “I will go to the ballot box on Saturday next week to cast a ‘no’ vote, as we all should do,” he said as he called on the public to reject the proposition to reactivate the decommissioned
RSS