Taiwan’s GDP is forecast to grow 4.36 percent year-on-year this year, as the economy is expected to benefit from rising exports and stable private investment, led by semiconductor companies and firms linked to the artificial intelligence (AI) boom, Yuanta Securities Investment Consulting Co (元大投顧) said on Friday.
The forecast represents a 0.67 percentage point increase from its previous estimate of 3.69 percent in March, Yuanta said in a report.
Major research institutes since April have raised their predictions for Taiwan’s economic growth this year, with the estimated growth ranging from 3 percent to 3.94 percent — higher than the average of 3.14 percent over the past 10 years.
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The Directorate-General of Budget, Accounting and Statistics (DGBAS) late last month also lifted its GDP growth forecast for this year from 3.43 percent to 3.94 percent, exceeding the annual growth target of 3.5 percent set by the National Development Council.
Yuanta’s upward revision came after GDP in the first quarter of the year increased by 6.56 percent from a year earlier — an 11-quarter high — beating its March prediction by 0.6 percentage points, the report said.
It also came as the world’s economy is projected to grow steadily this year, with global trade in goods expected to expand by 2.3 to 3.2 percent year-on-year this year, compared with an increase of 0.1 to 1 percent last year — which would help boost Taiwan’s exports, it said.
Taiwan’s exports expanded 9.1 percent year-on-year during the first five months of this year, higher than the average growth of 3.9 percent for the same period over the past 10 years and indicating strong momentum in external demand, the report said.
Local manufacturers are also to complete their inventory adjustments in the next few months, which would boost firms’ capacity utilization and contribute to shipment growth, it said.
Moreover, Taiwan’s export structure is also improving, as outbound shipments of electronic products increased nearly 20 percent in the first five months, becoming a major pillar of the economy, and the decline in non-electronic exports shrank significantly, reducing its drag on overall exports, the report said.
As a result, Yuanta upgraded its Taiwan export growth forecast by 2.33 percentage points to 8.51 percent this year, compared with the DGBAS’ 10.06 percent growth forecast.
Yuanta also raised its growth estimates for private consumption and private investment by 0.2 percentage points and 1.32 percentage points to 3.22 percent and 3.31 percent respectively. In comparison, the DGBAS last month upgraded its growth estimates to 2.77 percent for private consumption and 1.52 percent for private investment this year.
The consumer price index is projected to rise by 2.22 percent this year, 0.04 percentage points faster than the March forecast, after taking into account recent electricity rate hikes and the stickiness of inflation in the services industry, Yuanta said.
Yuanta’s inflation projection is above the central bank’s 2 percent target for the third consecutive year, warranting further interest rate hikes by the monetary authority in the future, it said.
The central bank early this month kept its policy rates unchanged, but further adjusted the selective credit control measures and raised the reserve requirement ratio by 0.25 percentage points to cool the property market and tighten liquidity.
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