Taiwan’s economy last quarter expanded 5.09 percent, 1.81 percentage points higher than a forecast in November last year, as exports proved much healthier than expected, thanks to robust demand for electronics used in new technology applications and the low-contact economy, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The trend is expected to continue this year, with clear order visibility through the first half, which merits upgrading the GDP growth forecast for the year to 4.64 percent, significantly higher than the previous forecast of 3.83 percent, it said.
“Taiwan’s economy looks solid and stable ahead, despite lingering uncertainty linked to the COVID-19 pandemic,” DGBAS Minister Chu Tzer-ming (朱澤民) said.
Photo: CNA
The agency expects exports to increase 9.58 percent this year, with high double-digit percentage gains for this quarter and the next, its quarterly report showed.
That would bolster the nation’s trade surplus to US$63.9 billion this year from US$58.8 billion last year, causing the New Taiwan dollar to appreciate further against the US dollar, Chu said, urging the public and private sectors to take advantage of a trade surplus.
A strong NT dollar coupled with low interest rates is favorable for local firms to expand their scale through mergers and acquisitions, Taiwan Institute of Economic Research (台灣經濟研究院) president Chang Chien-yi (張建一) has said.
External demand last quarter contributed 5.2 percentage points to the economy, which was weighed down by a 1.07 percent decline in private consumption, as border controls dashed hopes of a recovery in international travel, Chu said.
Capital formation was also a drag on the economy, with a 0.95 percent contraction during the fourth quarter of last year as aggressive expansion in 2019 created an unfavorable bar of comparison, DGBAS Statistics Department head Tsai Yu-tai (蔡鈺泰) said.
The economy this year would receive support on various fronts, Tsai said, predicting a 3.74 percent increase in private consumption, a 3.5 percent rise in capital formation and a 2.06 percent gain in government expenditure.
Taiwan’s foreign trade is expected to continue to thrive, thanks to fast-growing demand for 5G wireless communication devices, chips for high-performance computing, electric vehicles and Internet of Things applications, sectors in which local firms enjoy a competitive edge globally, Tsai said.
Major tech firms are expanding capacity to meet growing business needs, Tsai added.
Travel income might remain sluggish, as the world is unlikely to remove travel restrictions anytime soon in light of spiking COVID-19 infection rates, the DGBAS said.
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