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Nation sees 3.04-percent GDP growth in Q1

TAIPEI, Taiwan -- Thanks to a surge in local consumption, Taiwan saw 3.04-percent GDP growth in the first quarter of 2014, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

Taiwan's GDP totaled NT$3.7461 trillion in the first quarter. The global economy is recovering but with some risks, the DGBAS cautioned. Since Taiwan's economy is closely related to the global economy, the DGBAS has erred on the side of caution with its forecast about the local economy.

Thanks to higher earnings, local companies doled out more performance-based and year-end bonuses, resulting in a 6.36-percent increase in average earnings in January and February, the data showed.

Stock transactions surged 33.29 percent in the first quarter. The stock index reached 8,591 points on average, contributing to a market capitalization of NT$3.8 trillion.

Car sales also climbed up. New license plate registrations grew 10 percent on an annual basis. Thanks to good weather conditions, there were more public outings and spending during the Chinese New Year and the 228 Memorial Day, contributing to 3.25 percent and 5.27 percent revenue growth in the fields of retail service industry.

The DGBAS' preliminary forecast indicated a 2.94-percent growth in private consumption in the first quarter, up 0.1 percentage points from the DGBAS' previous forecast of 2.84 percent. The growth was also partially due to a relatively low base period a year ago, the DGBAS said.

Capital formation declined 0.3 percent while government spending dipped 1.21 percent in the first quarter.

Export Performance in the First Quarter

Export performance mostly fell within expectation. Customs-cleared exports grew 0.98 percent year-on-year. Exports of electronics products, machinery and base metals grew, while the export of optical instruments, information technology products and mineral products declined.

Exports of optical instruments such as panels have dropped, as the supply chain in mainland China began to churn out domestically produced products, and orders placed from emerging countries went down, the DGBAS said.

In regard to the global economy, international research institutes mostly pointed out strong fundamentals, the DGBAS said, adding that there were also latent risks, such as the U.S. Fed's quantitative easing (QE) impact on emerging economies, re-structuring of industrial landscape in mainland China, and the consumption tax that will be applied in Japan.

Analysts Optimistic about the Future

Tony Phoo, Taipei based economist of Standard Chartered, said the latest GDP growth figure exceeded market expectation. It is also the best figure in the past five quarters. The economy has been growing for four consecutive months, showing that foreign demand is providing growth momentum.

Phoo said that export growth and trade surplus contributed to the first quarter growth, adding that local manufacturing sector has also had a good year so far. Phoo is also optimistic about the future of local technology firms.'

With the latest GDP figure, Standard Chartered believes that there will be a strong economic recovery in the second half of the year. Higher household income and a stable job market are likely to support public consumption down the road, the bank said.

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