DBS Bank Ltd yesterday revised upward its GDP growth forecast for Taiwan to 5.5 percent this year, from the 5 percent it predicted in April, citing better-than-expected investments.
Imported capital goods advanced 63.5 percent in August, indicating that local manufacturers, especially those in the semiconductor industry, increased their investments, Singapore-based DBS economist Ma Tieying (馬鐵英) told a videoconference.
Data for last month had not been released, but the momentum in July and August should have remained intact last month, Ma said.
Photo: Lee Chin-hui, Taipei Times
“With annual growth of 7.4 percent, Taiwan’s economy in the second quarter was brisker than expected,” she said.
“We also boosted our forecast for the third quarter to 4 percent, from 3.8 percent predicted in April, due to strong investment and recovering consumption in July and August,” she added.
However, the bank slashed its growth estimate for the fourth quarter from 3 percent to 1.8 percent, as export growth might slow to a single-digit rate compared with an annul rise of 31 percent in the first eight months of this year, Ma said.
“Exports will likely face headwinds, as demand from China could decline due to the country’s power rationing, which would limit production of Chinese electronics companies,” she said. “China is the largest market in terms of exports of intermediate electronics from Taiwan.”
Taiwan’s exports to China, including Hong Kong, have increased at declining rates for five months in a row, from 35 percent annual growth in March to 16 percent in August, she said.
Taiwan’s exports to Southeast Asia also slowed last month, with nations in the region reporting COVID-19 outbreaks that interrupted production and reduced import demand, Ma said.
“These negative factors have not fully been reflected on Taiwan’s economy and might become more obvious in the fourth quarter,” Ma said. “In an even worse scenario, these factors could continue existing and slowing the local economy in the first quarter next year.”
DBS Bank’s 5.5 percent growth forecast is lower than the 5.88 percent predicted by the Directorate-General of Budget, Accounting and Statistics (DGBAS).
The bank predicted 2.8 percent growth next year, also lower than the DGBAS’ 3.69 percent projection.
The central bank would stay put this quarter, as the labor market has not improved much, Ma said.
However, it might raise its policy rates in the second quarter of next year at the earliest, if employment improves, she said.
Dutch brewing company Heineken NV yesterday said that it has reached an agreement to acquire a subsidiary brewery of Taiwan’s Sanyo Whisbih Group (三洋維士比集團). Heineken is to assume majority ownership and management rights of the Long Chuan Zuan Co (龍泉鑽興業) brewery in Pingtung County’s Neipu Township (內埔), the Dutch company said. It would become the first multinational brewing company to operate brewery in Taiwan once the acquisition is completed. The deal has been approved by the Ministry of Economic Affairs’ Investment Commission, but details of the financial transaction cannot be disclosed at this time, as terms of the settlement have not been completed,
LOOK WHO OWES: China’s exposure to Taiwanese banks was the second-largest, with Luxembourg third, followed by Hong Kong and Japan, the central bank said The US remained the largest debtor country to Taiwan’s banking sector for a 27th consecutive quarter in the first quarter of this year, with its exposure rising 8.3 percent from a quarter earlier on the back of an increase in US bonds, the central bank said on Friday. Data compiled by the central bank showed that outstanding international claims by Taiwanese banks on a direct risk basis to the US stood at US$125.38 billion as of the end of March. Department of Financial Inspection deputy head Pan Ya-hui (潘雅慧) said that the US Federal Reserve’s launch of a rate hike cycle in
GREEN CITY: The company is set to invest US$8 billion to make electric vehicles and batteries for a new city that would rely entirely on renewable energy sources Indonesia said that Hon Hai Precision Industry Co (鴻海精密) is considering investing in the country’s new capital city, a move that would bolster the US$34 billion construction project. Hon Hai, which is known as Foxconn Technology Group (富士康科技集團), is looking at setting up an electric bus system and an Internet of Things network at Nusantara, as Indonesia’s new capital is to be called, Indonesian Minister of Investment Bahlil Lahadalia said in a statement yesterday. Hon Hai chairman Young Liu (劉揚偉) met with Indonesian President Joko Widodo on Saturday to discuss the company’s plan to invest US$8 billion to build a manufacturing plant
WHOLLY OWNED SUBSIDIARY: Costco Wholesale said it expected the purchase of the remaining 45 percent stake to add 1 to 1.5 percent to its earnings per share US-based Costco Wholesale Corp on Thursday said that it had purchased the remaining 45 percent stake in Costco President Taiwan Inc (台灣好市多) for US$1.05 billion, making the local company a fully-owned unit. “We estimate that the purchase would add about 1 to 1.5 percent to [our] earnings per share,” Costco said in a statement. Costco President Taiwan was established as a joint venture with Kaohsiung-based President Group (大統集團), which held a 45 percent stake. Since the first Costco store opened in Kaohsiung in 1997, 14 outlets have been set up in Taiwan, company data showed. PROFITABLE Three Costco stores in Taiwan — in Taipei’s Neihu