Taiwan’s GDP might expand 2.12 percent this year, as exports have stabilized and private investment accelerates amid technology advancements and a supply chain realignment, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The growth figure is the same as three months earlier and results from expectations of slightly better exports and weaker consumer activity, the Taipei-based think tank said.
“In the absence of major external blows, Taiwan’s GDP growth might stay above 2 percent this year, with a modest pickup in the second half,” TIER president Chang Chien-yi (張建一) said.
Trade tensions between the US and China, as well as between Japan and South Korea, would continue to cloud the landscape, although Taiwan might benefit from order transfers in the short term, Chang said.
Exports and industrial production last month posted minor growth and might improve further in the coming months with the advent of the high season for technology products, he said.
While Beijing and Washington resume trade negotiations, the world remains skeptical that the two sides could iron out their differences, so firms have avoided aggressive inventory buildups, Chang said.
Exports are expected to rise 2.18 percent this year, 0.1 percentage points higher than the institute’s previous forecast, while imports might grow 2.6 percent, 0.15 percentage points lower than its earlier estimate, as international raw material prices have yet to recover, TIER said.
Domestic demand is holding resilient, the institute said, adding that private investment in particular might gain 5.2 percent, up 1.1 percentage points from its projection three months earlier.
Local semiconductor firms have bought capital equipment to maintain their global technology leadership, while the government’s “Invest in Taiwan” program — which provides tax credits and other incentives to foster capital repatriation — has received a more positive response than expected, the institute said.
As of the middle of this month, the government had processed 93 applications with investments totaling NT$452 billion (US$14.54 billion), Chang said, adding that the benefits would start to become evident in the coming quarters.
The institute said it expects the New Taiwan dollar to trade at an average of NT$31 against the US dollar this year, a depreciation of NT$0.2 from its previous forecast, based on the US economy’s better-than-expected performance, while Europe is floundering.
Exports to the US would increasingly shift from indirect to direct production, as some China-based firms move production lines back home, TIER economist Gordon Sun (孫明德) said.
Firms that relocate to Vietnam should watch out for punitive tariffs from Washington, as Vietnam also has a serious trade imbalance with the US, Sun added.
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