Taiwan's economy forecast to gain steam in second half
August 5, 2014, 12:00 am TWN
TAIPEI--Taiwan's economy is expected to pick up in the second half of the year, building on its high growth in the April-June period quarter, according to British banking group Standard Chartered Bank.
The Directorate General of Budget, Accounting and Statistics (DGBAS) reported on July 31 that Taiwan's gross domestic product (GDP) grew 3.84 percent year-on-year in the second quarter, the highest rate in six quarters.
The data beat market expectations of a 3.2 percent growth and was close to Standard Chartered's projection of 3.6 percent.
"Looking at the detailed breakdown, the Q2 growth was driven mainly by the strong manufacturing sector, amid increasing exports and domestic demand," Tony Phoo, a Taipei-based economist at Standard Chartered, wrote in a research report last week.
Taiwan's gross capital investment also rebounded to a 6.86 percent year-on-year growth from a decrease of 0.53 percent in the first quarter, Phoo said.
That indicated rising manufacturing confidence, as steady global demand for tech products continued to benefit local producers of electronics parts and components, he said.
Furthermore, consumer confidence rose to a record high in Q2, as jobs data and optimism toward household income improved, the economist said.
The second-quarter economic data suggests that Taiwan's recovery "is gaining momentum and overall growth is expected to pick up even more in the second half of 2014," Phoo said.
He forecast a 3.9 percent growth in the country's GDP for 2014, above the DGBAS' projection in May of a 2.98 percent increase.
Australia and New Zealand Banking Group Ltd. also gave an upbeat outlook on Taiwan's economy in the second half, saying that it "will continue to recover on the back of a sustained recovery in advanced economies and Mainland China."
Although the bank maintained its forecast of a 3.1 percent growth in Taiwan's GDP this year, it warned that the country is at risk of losing its export competitiveness, especially as China and South Korea are expected to ink a free trade agreement soon.
In addition, political uncertainty in Taiwan is a factor, given that nationwide municipal elections will be held in late November, the bank said.
"Should political tensions continue to worsen, it could jeopardize business confidence," the bank said.
Meanwhile, ANZ was bullish on China's economic prospects in the second half, saying that "the growth momentum is picking up while inflation remains mild."
China will achieve its economic growth target of 7.5 percent in 2014, the bank predicted, citing improving economic indicators.