Taiwan’s economy is likely to hold steady this quarter on the back of a favorable global landscape, but the outlook for private investment and consumption is dull, the Germany-based Ifo Institute said in its latest quarterly World Economic Survey.
The Munich-based institute arrived at the observations for the first quarter of this year after surveying 1,199 experts in 120 nations.
The confidence gauge for the global economic climate rose from 17.1 to 26 quarter-on-quarter, the highest in more than 10 years and the fifth consecutive increase, according to the survey released on Wednesday last week.
The rosy view might extend into the first half of the year with the six-month outlook gauge printing 23.9, up from 16.9 three months earlier, the survey said.
Economic improvement abroad is favorable to the nation’s export-focused economy, although the private sector is still conservative about capital equipment spending, the survey said.
Experts hold an overall neutral view about the nation’s current economy, with the reading kept at zero, suggesting an equal number of positive and negative opinions, it said.
That is because more experts hold a dim view about private investment and fewer people are upbeat about private consumption, the survey said.
Capital equipment imports by Taiwanese semiconductor firms have been in negative territory since May last year, following a year of active purchases to maintain their technology leadership on the world stage, it said.
Government officials and economists expect private investment to improve noticeably this year, driven by rapidly growing artificial intelligence and Internet of Things applications, it showed.
The emerging technologies are expected to offset the slowdown in smartphone sales as demand for mobile devices becomes increasingly satiated, analysts said.
Taiwan is home to the world’s largest contract chipmakers and chip designers as well as suppliers of camera lenses, casings, tough panels and other critical components used by smartphone brands.
Six months from now, the economy is likely to show positive cyclical movements on the back of better exports, imports, capital spending and private consumption, the survey cited experts as saying.
Inflationary pressures might increase while long and short-term interest rates might rise, the survey said.
Global central banks are expected to take cues from the US Federal Reserve and normalize their monetary policies this year, while most experts bet that Taiwan might keep its current monetary policy to support GDP growth, it said.
Against this backdrop, the chances that the US dollar will rise against the New Taiwan dollar are higher than three months earlier, the survey said.
A weak NT dollar is favorable to local exporters, boosting pricing competitiveness and allowing them to book foreign-exchange gains when settling payments.
In addition, local shares might tumble further after corrections earlier this month, trailing global equity markets, the survey said.
Concerns over monetary tightening heightened after US economic barometers fared better than expected, rocking global markets.
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