Foreign banks have revised upward their economic growth forecasts for Taiwan this year, citing better-than-expected industrial production (IP) data for the month that was released on Wednesday.
“Taiwan’s June IP report delivered another positive surprise, with broad-based gains across tech and non-tech sectors. Manufacturing inventories showed notable downturn in May and April,” Hong Kong-based JPMorgan Chase economist Grace Ng (吳向紅) said in a research note.
“We have revised up Taiwan’s second-quarter GDP estimate on the back of recent strong data,” Ng said.
For now, JPMorgan expects the nation’s economy to expand 3.8 percent this year, up from the bank’s previous estimate of 3.5 percent growth.
The government, which in May forecast the economy would expand by 2.98 percent this year after GDP grew 2.11 percent last year, is scheduled to update its GDP growth forecast on Thursday next week.
JPMorgan’s upward adjustment came after the latest official data showed growth in industrial production, which rose 8.63 percent year-on-year last month and grew 6.43 percent last quarter from the same period last year, buoyed by the launch of new mobile devices and the continued recovery of global demand for other products.
During the first half of the year, industrial production gained 4.48 percent from a year ago, compared with a 0.7 percent increase for the whole of last year and a 1.2 percent growth in the second half of last year, according to data released by the Ministry of Economic Affairs on Wednesday.
Export orders for last month also moved at their fastest pace in 17 months, increasing 10.6 percent year-on-year, the ministry reported on Monday.
A further upside is the continued growth in domestic commercial sales — which include the food and beverage, retail and wholesale sectors — with the latest data showing sales rising 4.1 percent annually last month and 4.4 percent year-on-year in the second quarter, the ministry said on Wednesday.
Hong Kong-based Credit Suisse AG economist Christiaan Tuntono said in a separate report yesterday that Taiwan’s GDP growth in the second quarter would likely “improve visibly and surprise on the upside,” given that there is a high correlation between industrial production growth and the nation’s GDP growth.
“Meanwhile, we expect Taiwan’s commercial sales growth to remain resilient, helping to make additional contribution to GDP growth on top of those from the trade surplus,” Tuntono said.
Credit Suisse may upgrade its economic growth forecast for Taiwan on the back of the strong economic data.
Last month, the bank predicted Taiwan’s GDP would expand 3.4 percent this year, up from the 3.2 percent growth it estimated previously.
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