Standard Chartered Bank yesterday raised its forecast for Taiwan’s GDP growth this year from 3.1 percent to 3.7 percent, as its export-focused economy fared stronger than expected so far and would gather faster traction going forward.
Taiwan’s economy had a strong start this year, as evidenced by a 6.51 percent rebound in GDP growth during the January-to-March quarter, the fastest rise since early 2021, the bank’s senior economist Tony Phoo (符銘財) said.
Phoo said growth would gain more momentum in the second half on a global tech cycle upturn, an improvement in corporate capital expenditure and an end to the inventory adjustments.
Photo: Andy Rain, EPA-EFE
Taiwan is home to the world’s major suppliers of electronics used in artificial intelligence (AI), smartphones, notebook computers, wearables, TVs and cars.
Taiwan Semiconductor Manufacturing Co (台積電), whose clients include Apple Inc, Nvidia Corp, Intel Corp and Advanced Micro Devices Inc, is to shed light next week on its business outlook after delivering better-than-expected second-quarter revenue.
Other AI server vendors such as Hon Hai Precision Industry Co (鴻海精密), Quanta Computer Inc (廣達) and Wistron Corp (緯創) also reported robust sales.
“We believe a pickup in the tech cycle and an end to the inventory adjustments would provide strong support to Taiwan’s GDP growth,” he said.
The encouraging trends are: purchasing managers’ index being in expansionary territory for several months, a spike in exports of information communication technology products and leading tech producers turning upbeat about the growth outlook in the second half of the year, Phoo said.
Additionally, private investment, which is a tepid growth contributor, is to see a rebound after a key gauge of tech sector confidence — imports of semiconductors equipment and integrated circuit chips — rose 11.1 percent in May for the first time since September 2022, he said.
Meanwhile, Taiwan’s private consumption is to hold resilient in light of a tight labor market and a buoyant stock market, Phoo said.
The TAIEX has repeatedly rallied to new highs to date, benefiting financial service providers, recreational activity and the housing market, he said.
Taiwan is on track to meet its target of attracting 10 million tourist arrivals, lending support to entertainment and leisure facilities, Phoo said.
The inflationary pressure is decreasing, even though the headline consumer price index remained above the 2 percent target, which would allow the central bank to hold interest rates steady for the rest of this year, he said. citing that core CPI, a more reliable price tracker because it excludes volatile items, has stayed at the 2 percent target for months.
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