Singapore-based DBS Bank yesterday predicted that Taiwan’s GDP growth this year would expand at an annual rate of 3.5 percent, a marked improvement from last year’s estimated 1.1 percent, on the back of a recovery in exports and private investment.
The projection would place Taiwan among the top performers in Asia, thanks to positive momentum in exports and private investment, particularly in the semiconductor sector, DBS economist Ma Tieying (馬鐵英) said during a teleconference.
The global semiconductor market could stage a rebound of 13.1 percent to 20.2 percent this year, reversing last year’s contraction induced by sharp global inflation and monetary tightening, Ma said, citing international research bodies IDC Corp and Gartner Inc.
Photo: CNA
The trend bodes well for Taiwan, home to the world’s major chip suppliers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電).
TSMC last week said that it is looking at a 25 percent increase in revenue this year. UMC is to offer guidance next week.
The nation’s exports of electronic components, mainly chips, last year shrank 10.7 percent, as clients cut inventories to cope with poor end-market demand. The pace of decline narrowed to 1.2 percent last month, indicating that inventory adjustments were approaching an end, Ministry of Finance data showed.
Companies’ efforts to enhance supply chain resilience would lend support to restocking, though GDP growth in advanced economies would slow this year, Ma said.
The twists are positive for private investment in Taiwan, an important GDP component that has weighed on the economy over the past two years, she added.
By contrast, private consumption would lose some traction this year, following a surge in reopening demand last year, Ma said.
Nevertheless, fundamental support for consumption remains intact in light of enhanced employment and income conditions, Ma said.
The seasonally adjusted unemployment rate stands at a two-decade low of 3.4 percent and average monthly wages are set to rise by 4 percent this year, she said.
Consumer prices would moderate to 1.7 percent this year, lower than the level seen last year, but still above the long-term trend Ma said.
Energy prices still pose an inflation risk though global crude oil prices might hold stable at US$75- US$80 a barrel, she said, adding that a potential electricity price hike is on the horizon, as state-run Taiwan Power Co (台電) has incurred substantial losses.
Against this backdrop, the central bank would adopt a neutral monetary policy stance this year on the grounds that the nation’s interest rate is quite low, despite five rate hikes previously, the economist said.
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