The nation’s economic growth is gathering pace this year, boosted by increased spending on equipment by local manufacturers as a better-than-expected global economic recovery is spurring on rising demand for electronics made by local firms, a Taipei-based think tank forecast yesterday.
The Taiwan Institute of Economic Research (TIER, 台經院) yesterday raised its forecast for the export-oriented economy’s growth this year for the second time to 5.11 percent year-on-year, from the 4.81 percent it estimated in January.
TIER’s forecast is higher than the government’s projection of 4.72 percent growth this year and is also the highest among local private-run think tanks, such as the Chung-Hua Institution for Economic Research (中華經濟研究院), which has forecast 4.99 percent year-on-year GDP growth.
TIER economist Chen Miao (陳淼) said strong private investment was the key.
“Local companies are more willing to invest and they are able to increase [equipment] spending, leading to an upward revision of our forecast on private investment,” Chen said.
Private investment is expected to grow 15.3 percent year-on-year to US$1.74 trillion, faster than the increase of 7.9 percent to US$1.6 trillion originally estimated, Chen said.
Taking the lead, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, has budgeted a record high of US$4.8 billion on new equipment this year.
Exports are expected to grow by 26.83 percent to US$258.3 billion, exceeding the previous estimate of a 10.51 percent increase to US$225.1 billion, as the better-than-expected recovery of the global economy is helping stimulate demand for goods made by local firms, Chen said.
“Recently, we have seen the US and Europe join the economic recovery, which had already started in other regions,” he said.
That reflected an improvement in an industrial indicator based on TIER’s survey of local manufacturers. The indicator rose to 118.27 last month, up from a revised 116.54 in February, indicating local manufacturers are more bullish about orders and demand over the next six months.
This year, imports are expected to expand to US$233.4 billion because of rising raw material prices and increasing equipment purchases, bringing the nation’s trade surplus to US$24.9 million, down from an earlier estimate of US$32.7 million.
Chen kept the private consumption forecast unchanged at 2.7 percent year-on-year because of high unemployment and stagnant payrolls.
Taiwan’s consumer price index is expected to rise mildly to 1.77 percent year-on-year, from TIER’s previous forecast of 1.54 percent, a figure that Chen said would not undermine the economic recovery.
TIER expects the New Taiwan Dollar to rise to about NT$31.35 against the US dollar by the end of this year, a faster revaluation when compared with a January forecast of NT$31.395.
Chen did not take a stronger Chinese yuan into consideration. An appreciation of the yuan against the greenback is expected to boost Asian currencies.
Yesterday, the NT dollar rose NT$0.101 against the US dollar to close at NT$31.359, a 20-month high, on turnover of US$1.199 billion.
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