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Standard Chartered, Barclays diverge on 2014 GDP growth

TAIPEI, Taiwan -- Barclays PLC has slashed its forecast for Taiwan's gross domestic product (GDP) growth to 3.6 percent, while Standard Chartered Bank has maintained its full-year forecast at 3.9 percent.

The Central News Agency (CNA) yesterday reported that Standard Chartered Bank has maintained its growth forecast for Taiwan's GDP in 2014 at 3.9 percent following better-than-expected results in the first quarter.

GDP Grew 3.04% Year-on-Year in Q1: DGBAS Data

According to data released by the Directorate General of Budget, Accounting and Statistics (DGBAS) on April 30, Taiwan's GDP grew 3.04 percent in the first quarter from a year earlier, the best performance in the past five quarters and slightly better than Standard Chartered's expectation of a 3.02 percent increase.

The economic growth was driven by a recovery in exports and strong gains in trade surplus, along with stronger growth in the manufacturing sector and rebounding consumer confidence that has risen to the highest level since 2011, said Tony Phoo (符銘財), a Taipei-based economist at Standard Chartered.

"More importantly, we believe today's data further supports our view that the economy is likely to gain momentum in the second half, as recent data remains upbeat on the local tech sector, boding well in terms of capital expenditure as well as hiring in the manufacturing sector," he said.

"Also, consumer confidence may continue to be supported by optimism in terms of household income, aided by a steady job market outlook," Phoo wrote in a note Wednesday after the release of the first-quarter GDP data.

British banking group Barclays PLC slashed its forecast for Taiwan's GDP growth in 2014 after the country's first-quarter growth failed to meet its previous estimate.

CNA said that the British bank lowered its projection to 3.6 percent growth Thursday from the earlier estimate of 4 percent in February, after Taiwan's first-quarter GDP posted 3.04 percent annual growth, lower than an earlier estimate of 3.6 percent.

'Recovery is still slow'

"The recovery is still slow," Leong Wai-ho (梁偉豪), a senior regional economist with Barclays, wrote in a research note. He did, however, predict faster growth in the second quarter.

The recovery in exports and domestic consumption supported growth during the first three months of this year, with manufacturing and financial service sectors contributing most, according to the report.

Despite the downgrade, economic growth for the year is still set to be higher than in 2013, when GDP grew 2.11 percent, Leong said.

In mid-February, the government raised its forecast of Taiwan's 2014 GDP growth to 2.82 percent from an earlier estimate of 2.59 percent.

Taiwan's GDP grew slightly faster than expected in the first quarter because of surprising gains made in domestic consumption, government statistics showed.

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