Taiwan to see 2.98% GDP growth in 2014: DGBAS
By John Liu ,The China Post
May 24, 2014, 12:05 am TWN
TAIPEI, Taiwan -- Taiwan will see 2.98 percent GDP growth in 2014, a 0.16-percentage point upward adjustment from the previous forecast, the Directorate-General of Budget, Accounting and Statistics (DGBAS, 主計處) said yesterday.
Local demand will be the main driver for this year's economic growth. While foreign demand is expected to contribute 0.51 percentage points to this year's GDP growth, domestic demand will contribute 2.47 percentage points, totaling 2.98 percent GDP growth.
According to the DGBAS report, local firms are now more willing to provide raises to employees and the stock market is gaining momentum, resulting in more accumulated wealth for the general public and consequently more purchasing power. In addition, with telecommunications firms actively pursuing 4G broadband service and airlines expanding their aircraft fleets, the DGBAS predicts increased capital formation.
Thanks to the economic improvement, the DGBAS adjusted the nation's GDP growth in the first quarter from 3.04 percent to 3.14 percent, and forecast 2.79 percent, 2.96 percent and 3.01 percent GDP growth in the second, third and fourth quarters, respectively.
Less Optimistic Global Economy
In regard to the world economy, Global Insight is not as optimistic with its latest forecast released in May. The research institute adjusted downward 0.3 percentage points to 3 percent for worldwide GDP growth in 2014. The institute forecast 2-percent growth for advanced economies, which was a downward adjustment of 0.1 percentage points, and 4.6-percent growth for emerging economies, which was a downward adjustment of 0.5 percentage points.
A weakened global economy is likely to affect Taiwan's exports, according to the DGBAS, which adjusted downward its forecast for Taiwan's export value by US$700 million this year. Total import value was adjusted downward by US$500 million.
Strong Local Demand
The expansion of local industries will be a major driver of Taiwan's growth, the DGBAS said. Local semiconductor firms are expected to churn out mass production utilizing the advanced manufacturing facilities they previously invested in. Global brand names of mobile devices are expected to increase orders for local firms. The new technology Internet of Things (IOT) is also expected to create more business opportunities, the DGBAS said.
Private consumption is forecast to grow 2.58 percent this year. Capital formation in the private sector is expected grow 4.73 percent, reflecting the local semiconductor industry's continuous investment in advanced manufacturing facilities, telecommunications firms' investment in the 4G network and airliners acquiring more aircrafts.
2.09% GDP Growth in 2013
The DGBAS also made an adjustment to the economic growth rate in 2013, down from 2.11 percent to 2.09 percent. Due to lower-than-expected investment figures, the DGBAS adjusted downward the GDP growth in the fourth quarter from 2.95 percent to 2.88 percent, which resulted in GDP decline for the whole year.