The Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday raised its GDP growth forecast for Taiwan to 1.63 percent, up from its March prediction of 1.5 percent, due to better-than-expected exports, Yuanta-Polaris president Liang Kuo-yuan (梁國源) said.
The nation’s exports reported stable growth of 1.5 percent from a year earlier for the first eight months, outperforming neighboring countries such as Japan, South Korea and Singapore, Liang told a news conference in Taipei.
The growth also beat some foreign think tank forecasts that Taiwan’s exports would fall prey to contracting global trade amid the COVID-19 pandemic, he said.
Photo: Wu Chia-ying, Taipei Times
The momentum in exports is mainly due to demand for information and communication technology (ICT) products that allow teleworking amid the pandemic, he said.
Exports last month expanded 8.3 percent to US$31.17 billion, fueled by an annual rise of 18.72 percent for exports of ICT products, while other industries reported an annual dip of 3.5 percent, Liang said.
“Thanks to stable growth in exports and declining imports due to falling oil prices, the nation’s trade surplus improved from a year earlier, which also helped support GDP growth,” he said.
“Overall, you can see that foreign think tanks are more pessimistic about the local economy this year, as they assumed that Taiwan’s export-oriented economy would suffer amid shrinking global trade, but so far, that is not the case,” Liang said.
The institute projected a “K-shaped recovery” for Taiwan’s economy, meaning uneven but continued growth among different sectors and income groups.
The Directorate-General of Budget, Accounting and Statistics has predicted a “V-shaped recovery,” while Cathay Financial Holding Co (國泰金控) expects a “Nike-swoosh recovery.”
Uneven growth has affected local equity market, job market and industrial production statistics, where some industries, especially the semiconductor industry, have continued to expand, while others have been sluggish, Liang said.
The institute said that the local economy would grow 3.1 percent next year, but added that how soon the economy would recover would depend on how companies that have benefited amid the pandemic could offset declines at other firms, he said.
Unfinished stimulus policies, escalating US-China trade tensions and time-consuming transfers in global supply chains would be the main risks for the global economy, including Taiwan, next year, Liang said, adding that he expects there to be no major new outbreaks of COVID-19.
The New Taiwan dollar is expected to continue appreciating against the US dollar next quarter and next year on the back of a weakening greenback, Taiwan’s rising current-account surplus and the solid fundamentals of the nation’s economy, Liang said.
Life insurers are not likely to increase foreign investment considerably, as most have reached the regulatory maximum in the ratio of overseas investment to total investment, he said, adding that this would reduce NT dollar supply and boost the currency against the US dollar.
The NT dollar is expected to be worth US$29.47 at the end of this month and US$29.05 at the end of this year, and be worth US$29.00, US$28.95, US$28.9 and US$28.85 at the end of the four quarters next year respectively, Liang said.
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