UBS Securities has maintained its above-market-consensus forecast for Taiwan’s economic growth this year at 4 percent, on the back of improving exports and the domestic economy.
The forecast is better than the Directorate-General of Budget, Accounting and Statistics’ 2.98 percent growth forecast made on Friday last week.
“While real GDP was softer than our expectations at 3.1 percent year-on-year in the first quarter of 2014, it nevertheless came in ahead of consensus and remained consistent with the gradual recovery we are projecting for 2014,” UBS economist Silvia Liu (劉醒威) said in a research note on Monday.
More importantly, the latest macro data shows exports accelerating from a temporary soft patch in the first quarter of this year, she said.
“This [accelerating exports], plus the steadily improving domestic economy, suggests that not only has growth become more entrenched, the pace of which should also accelerate over the next one to two quarters,” Liu wrote.
According to UBS data, Taiwan’s exports growth last month picked up to 6.2 percent year-on-year in nominal terms and to 8.5 percent year-on-year in real terms.
This was driven in particular by strong shipments to Europe and the US, and strong demand for electronics and machineries, the Swiss brokerage firm said.
Meanwhile, domestic growth in employment accelerated for the fourth month last month after having hit bottom late last year, while average employee earnings increased 5.3 percent year-on-year in the first quarter of this year, a good number by Taiwan’s standards, Liu said.
“We have been expecting private consumption to be less weak this year, reflecting the resilient labor market, better incomes and improving household purchasing powers,” she said.
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