TAIPEI: The Taiwan government upgraded its forecast for the nation’s GDP growth this year to 1.92 percent, from the 1.87 percent it predicted three months earlier, saying that an improving global economic environment and stable crude oil prices might boost exports.
The upward revision came after the economy expanded 2.88 percent in the fourth quarter of last year, raising GDP growth to 1.5 percent for the whole of last year, 0.1 percentage points higher than the government’s estimate.
“The global economy is likely to grow slightly faster than predicted in the last forecast, which is favorable for local firms in the supply chain of global technology giants,” Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Chu Tzer-ming told in a news conference in Taipei.
Taiwan is home to the world’s largest contract chipmakers and chip designers, as well as suppliers of camera lenses, batteries and other critical components used in smart phones, PCs, connected vehicles and Internet of Things applications.
The nation’s GDP would gain 0.07 percentage points for every percentage point the US economy expands, Chu said.
The agency now expects exports to advance 8.5 percent this year, from its previous forecast of 4.95 percent, reversing a 1.73 percent decline last year, its report showed.
Major redesigns to Apple Inc’s popular iPhone series in time for its 10th anniversary this year are fueling expectations of massive replacement demand, lending support to the upward revision, Department of Statistics Director-General Yeh Maan-tzwu said.
The expectations have shored up the local bourse by 5.9 percent so far this year, with foreign fund inflows estimated at NT$14.38 billion (US$467.41 million), according to Taiwan Stock Exchange data.
Much of the GDP upgrade also has to do with crude oil and raw material price hikes, Yeh said, adding that crude prices rose from US$47 per barrel to US$53.5 per barrel over the past three months.
That means the actual increase in export volumes might not be as impressive as the headline figures suggest, Yeh said.
“Overall, I would describe the economic landscape as fair and stable without present and immediate downside risks,” Chu said.
The agency trimmed its growth forecast on private investment for this year from 2 percent to 1.85 percent, on the grounds that local firms might slow their pace of capital equipment purchases after aggressive spending in the final quarter of last year, Chu said.
The agency forecast consumer prices would increase 1.08 percent this year, up from its prediction of 0.75 percent three months earlier, after factoring in likely price hikes resulting from new labor laws.
The changes, which require more leave for new workers and higher overtime pay, might increase labor costs by NT$17.5 billion to NT$73 billion per year, Chu said.
That could lift the inflation gauge by 0.14 to 0.36 percentage points as companies pass on their costs to consumers, Chu said.