Economy on track to stable recovery: experts
June 29, 2014, 12:17 am TWN
TAIPEI--With recent economic data pointing to an improving economy in Taiwan, economists said Saturday that the local economic climate is on track to a stable recovery.
They said the World Bank has lowered its forecast of the world's economic growth to 2.8 percent from 3.2 percent for 2014, but Taiwan's gross domestic product growth will continue to steam ahead, outperforming the global economy's pace of growth.
In May, the Directorate General of Budget, Accounting and Statistics raised its forecast of Taiwan's GDP growth to 2.98 percent from the previous estimate of a 2.82 percent increase. Several major think tanks in Taiwan were even more upbeat, predicting that growth this year could top 3 percent.
Gordon Sun, Macroeconomic Forecasting Center at the Taiwan Institute of Economic Research (TIER), is among the economists upbeat about Taiwan's economic future. The TIER in April raised its forecast of Taiwan's GDP growth for 2014 to 3.23 percent, up 0.06 percentage points from an earlier estimate made in January.
Sun said Taiwan's export growth momentum for the second half of this year will become more visible due to strong demand from the U.S. and European markets for semiconductors, which is one of the drivers of the country's outbound shipments.
In May, Taiwan's exports showed signs of a continued recovery with the value totaling US$26.67 billion, up 1.4 percent from a year earlier. May was the fourth consecutive month for Taiwan's exports to record year-on-year growth.
Liu Meng-chun, head of Chung-Hua Institution for Economic Research's (CIER's) Economic Forecasting Center, said that export orders of Taiwanese firms are expanding and the current recovery resulted from an improvement across all of the sectors, instead of only in financial businesses, as was the case in the last recovery.
Export orders also rose in May, by 4.7 percent year-on-year, to reach US$38.02 billion, marking the fourth consecutive month of year-on-year growth. In the month, orders placed on made-in-Taiwan electronics products even rose more than 12 percent.
Liu said due to an export revival, Taiwan's domestic demand has been on the path to a stable increase, meaning that the country is stepping into a positive economic structural change.
The growth in local commercial revenue, which is composed of sales in the retail, wholesale and restaurant businesses, in May was the evidence of growing domestic demand. Last month, commercial revenue totaled NT$1.22 trillion (US$40.67 billion), up 3.9 percent from a year earlier and also up 2.2 percent from a month earlier.
Liu said the May economic composite indicator released by the National Development Council flashed a "green" light for the fourth consecutive month, showing that the local economy has been growing steadily.
He said the weighted index on the Taiwan Stock Exchange has traded above the 9,000 point mark since late May, and some market analysts even have high hopes that the index will challenge 10,000 points by the end of this year, adding a gaining equity market is expected to boost domestic demand further.
On Friday, the weighted index on the main board closed at 9,306.83 points.