The Yuanta-Polaris Research Institute (元大寶華研究院) yesterday raised its growth forecast for Taiwan, saying it predicts GDP to rise 3.57 percent this year on the back of better-than-expected exports and private investment.
The institute also said it expects the growth momentum to extend into next year, making room for the central bank to hike key interest rates by summer.
In June, the research house forecast that Taiwan’s GDP would grow 3.18 percent annually.
“Supported by moderate growth in exports and domestic demand, Taiwan has regained economic strength this year and is expected to do so next year as well, compared with the tepid economic expansion recorded in 2011 and 2012,” Yuanta-Polaris chairman Liang Kuo-yuan (梁國源) told a media briefing.
Next year, the economy is expected to grow 3.49 percent annually as private investment and exports are set to expand at a modest annual rate of 4.26 percent and 4.68 percent respectively, benefiting from accelerating global economic recovery, the institute predicted.
The launch of Apple Inc’s new iPhone 6 series and strong worldwide PC replacement demand resulting from Microsoft Corp ending support for its older-generation Windows operating system are to help fuel demand for electronic components made by local manufacturers this year, Liang said.
In addition, growing demand for the Internet of Things such as wearable devices is expected to be the driving force for Taiwanese exports next year, he said.
The institute now expects exports to grow at an annual rate of 5.51 percent this year, from the 4.99 percent it estimated in June.
It also forecast private investment to rise at an annual pace of 5.82 percent this year, higher than its previous estimate of 4.17 percent.
With economic growth back on track, Liang said the central bank is likely to hike key interest rates in the first half of next year at the earliest, after keeping its loose monetary policies unchanged since July 2011.
“It is possible that the central bank will take careful action in accordance with the US Federal Reserve’s moves,” Liang said.
The Fed is widely expected to raise interest rates at a measured pace in June next year, he said.
In addition, the central bank is facing growing pressure from the public to consider adjusting its monetary policy in light of a surge in food prices and living expenses, Liang said.
Yuanta-Polaris has maintained the forecast that it made three months ago for inflation, predicting an annual rise of 1.6 percent this year and one of 1.5 percent for next year.
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