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ANZ optimistic on Taiwan's economic outlook for 2014

TAIPEI -- Taiwan's economy will improve in 2014 on the back of an expanding global economy, according to Australia and New Zealand Banking Group Ltd. (ANZ).

Although “Taiwan's economic recovery seemed to be running out of steam in the second half of 2013,” it is expected to grow 3.6 percent in 2014, in line with global growth, the bank said in a recent note.

The global economy will expand 3.6 percent in 2014 from a projected 2.9 percent in 2013, ANZ predicted.

Although the bank recently trimmed its 2013 GDP growth forecast for Taiwan's from 2.36 percent to 2 percent, it gave a more positive outlook for 2014, citing improvement in the economies of the United States and China.

The U.S. economy, a major end user market of Asia's supply chains, will expand, as indicated by the strength of its purchasing managers' index, the bank said. It forecast 3.1 percent economic growth in the U.S. for 2014, compared with 1.6 percent in 2013.

The improving economic outlook for the U.S. will positively impact Taiwan's economy, ANZ said, noting that Taiwan's exports are strongly linked to the performance of the U.S. manufacturing sector.

In addition, sustained demand from China will continue to be another growth driver, as it has become Taiwan's largest export market, accounting for about 40 percent of the total, the bank said.

Projecting that China's economy will rise by 7.2 percent in 2014, the bank said although the pace will likely be below the average rate in the previous years, the ongoing urbanization and industrial restructuring will provide more opportunities for Taiwan's manufacturers.

However, the bank warned of a possible downturn in the global technology cycle in 2014, saying the electronics sector will continue to drive the boom and bust of Taiwan's performance.

“Even though the electronic sector has exhibited its resilience in most of 2012 and 2013, the weakening of the Japanese yen and increasing competitiveness of South Korea will always present uncertainty,” ANZ cautioned.

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