The nation’s economy is showing signs of slowing down this quarter and needs a rebound in the second half of the year to keep GDP growth above 2 percent, DBS Bank said last week.
The largest lender in Southeast Asia by assets stood pat on its growth forecast for the nation at 2.5 percent, but said major economic barometers have fallen surprisingly.
“Risks have surfaced that GDP growth in the second quarter will miss the 2 percent mark. As such, a resilient second-half rebound is required to keep full-year GDP above 2 percent,” the bank said in a report.
Of the critical economic barometers, export orders slowed more than expected in April, while industrial production contracted, DBS Bank said.
The pace of the increase in exports moderated to 8.9 percent between April and last month, compared with an average pickup of 15.9 percent in the first quarter, the lender said.
Exports account for nearly 70 percent of the nation’s GDP and have a significant bearing on imports, private investment and consumer spending.
The slowdown has more to do with a temporary correction rather than the beginning of a downturn, DBS Bank said.
The outlook for exports might not be a big concern since the electronics sector remains on a cyclical upturn, the report said.
Apple Inc is due to release its iPhone 8 later this year and its innovative features should create new demand for electronic components, which bodes well for Taiwanese firms in Apple’s supply chain, it said.
The global economy remains on course for a recovery, while protectionism risks in the US and political risks in Europe have abated, the report said.
The US did not label Taiwan a currency manipulator and has reached a tentative agreement with Beijing to address to US-China trade imbalance, it said.
On the domestic front, if exports bounce back, private machinery investment should also pick up, the report said.
The construction industry is likely in the process of coming out of the woods as evidenced by the improvement in residential property transactions so far this year, the bank said.
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