With better-than-expected exports, strong growth in industrial production and surging imports of capital goods, Standard Chartered Bank, Taiwan yesterday revised upward its forecast for the nation’s economic growth for the full year to 5.9 percent, up from its previous estimate of 4 percent.
The bank also raised its GDP forecast for the first quarter from 7.1 percent to 10.2 percent, citing industrial production in the first two months rising 53.4 percent year-on-year, almost twice the 28.5 percent increase recorded in the previous quarter.
“The substantial growth in industrial production was chiefly driven by a strong rebound in outbound shipments, which climbed 52.5 percent from a year earlier in the first quarter,” Tony Phoo (符明財), Standard Chartered’s chief economist, said in a report.
Imports of capital goods soared by 73.8 percent in the first quarter, compared with 32.4 percent in the fourth quarter of last year, indicating that local enterprises had become more confident about the economy, the report said.
Standard Chartered’s GDP forecast revision came after Citigroup Taiwan Inc raised Taiwan’s economic growth projection to 7.2 percent for the full year on Tuesday, outstripping the government’s estimate of 4.75 percent.
Amid concerns over rising energy and transportation costs, Standard Chartered revised upward its inflation forecast by a small margin from 1 percent to 1.3 percent for this year, saying that in the second half, the low base effect from last year would gradually decrease.
Phoo said, however, that inflation would not rise substantially before clearer signs of a comprehensive recovery in the high-tech sector emerge and in consideration of the current high unemployment rate of 5.25 percent.
“Based on this, we didn’t adjust our prediction of the central bank’s interest rates for this year — that is, the central bank will still keep its discount rate at a record low of 1.25 percent,” he said.
Nevertheless, strong economic growth is expected to slow down in the middle of this year as the leading economic indicators have shown signs of reduced growth since the fourth quarter of last year, the report said.
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