Taiwanese government upgrades economic growth projection for 2017 to 2.05 pct

The Taiwanese government upgraded this year’s projection from 2.05 percent to 2.11 percent during the review last week. The government published its projection for next year for the first time. The economy is likely to grow 2.27 percent in 2018, the third straight year of acceleration. In particular, the DGBAS forecasts growth to drop to 1.9 year-on-year in the third quarter and 1.8 percent in the fourth quarter, down from 2.4 percent in the first half of this year. In the sequential terms, growth would rise modestly to 2.4 percent in the third quarter following a very weak 0.5 percent in the second quarter and ease again to 1.9 percent in the fourth quarter. In the last five years, the Taiwanese economic growth has averaged 2.1 percent year-on-year or 2.6 percent quarter-on-quarter. The central bank forecasts current potential growth to be 2.9 percent, noted DBS Bank in a research report.

Meanwhile, the DGBAS expects exports of goods and services to grow 4 percent in 2017 and then decelerate to 3 percent last year. This is contrary to the consensus expectations for stronger global growth next year. In the meantime, imports are likely to expand nearly as fast as exports this and next year, by 3.8 percent and 2.7 percent, respectively.

The DGBAS expects private consumption growth to stay flat at 1.9 percent in 2017-2018, citing the sluggish wage gains and the aging population. This signifies consumption growth would remain notably lower than its five-year average of 2.5 percent, stated DBS Bank.

The investment forecast seems positive. In all, investment is likely to rise 2.1 percent this year and 2.7 percent next year. This would mainly be driven from a sharp rise in public investment, helped by the government’s infrastructure spending program. Private investment is expected to expand 1.7 percent in 2018 and 1.6 percent in 2019.

“Compared to the official outlook report, we have a relatively higher estimate for net exports and consumption and a lower estimate for investment. Our GDP forecast currently remains at 2.4 percent for 2017 and 2.5 percent for 2018”, added DBS Bank.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest