Standard Chartered Bank raised its forecast for Taiwan’s GDP growth to 8.8 percent this year, from an estimated 5.9 percent in April, on stronger-than-expected second-quarter economic data and better improvements in domestic spending.
The nation’s economy grew by 12.53 percent in the period from April to June from the same period a year earlier, bolstered chiefly by increasing private investment, inventory build-up and net foreign trade, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said on Aug. 19.
While exports are expected to slow down from this quarter onward, domestic demand may continue to pick up and gain importance in its contribution to GDP growth in the second half, Standard Chartered economist Tony Phoo (符銘財) said in the report dated last Wednesday.
Private consumption is expected to account for nearly 60 percent of GDP this year and is expected to grow 3.22 percent and 0.57 percent year-on-year in the current and fourth quarters after expanding 4.41 percent in the second quarter, DGBAS forecast.
“This [private consumption] has been driven largely by rapidly improving consumer confidence, which rebounded to a six-year high in July,” Phoo said.
The economist attributed the improving sentiment to rebounds in both job and equity markets as seen in robust growth in auto, retail and property sales.
The job market saw an increase of 55,000 jobs in July despite the addition of 8,000 people to the unemployed population, DGBAS data showed.
Phoo said the central bank would take small moves to roll back the monetary stimulus of the past two years at a measured pace amid mild inflation risk and lingering uncertainty over the external economic outlook.
Phoo expects the central bank to hike interest rates slightly by 12.5 basis points again during the upcoming monetary policy meetings later this month from 1.375 percent currently and another 12.5 basis points in December, bringing the discount rate to 1.625 percent at the end of this year.
The economist said headline consumer prices would inch up 1.3 percent this year and climb to 2.2 percent next year when GDP would rise 4.1 percent from the level this year.
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