By Fanny Liu And Jenny W. Hsu
TAIPEI--Taiwan's government on Friday raised its 2014 growth
forecasts, citing stronger exports of electronics and cars and
resilient domestic demand.
The economy should expand 3.41% this year, up from previous
forecast of 2.98%, the Directorate General of Budget, Accounting
and Statistics said. After logging the strongest growth in three
years in 2014, Taiwan's gross domestic product could rise more
quickly at 3.51% next year, it said.
Exports, accounting for two-thirds of GDP, are expected to rise
3.21% this year, the agency added. It is better than its previous
forecast of 3.1% and a 1.41% growth last year.
Taiwan plays a central role in the global electronics supply
chain. Orders for Taiwanese components from tech titans including
Apple Inc. and Microsoft Inc. have been climbing for months, ahead
of product releases slated for later this year. Taiwan's major
export markets--the U.S. and China--are also recovering, albeit at
an uneven pace.
As exports grow, domestic demand also gets a lift. The
government and private sector have been hiring staff, raising wages
and building new facilities.
Private consumption will likely grow 2.62% this year--better
than an earlier estimate 2.58% and a 2.02% rise in 2013.
Investments by the private sector are expected to rise 4.83% in
2014, picking up from 4.73% previously forecast.
"U.S. economy continues to improve and the Euro-zone is
steadying, but emerging economies--led by China--are going through
structural reform and that is limiting the pace of the global
recovery," the agency said in a statement.
"Also, geopolitical tensions may hit financial markets and
commodity prices, adding uncertainties to the global outlook," it
added.
Standard Chartered economist Tony Phoo said: "The ongoing
recovery in the U.S. will continue to benefit Taiwan's exports in
the coming months, or even through the first half of 2015."
Mr. Phoo said Taiwan's economy is shifting to a faster gear. He
expects GDP in the second half will likely rise 4% from a year
earlier.
But some other economists said Taiwan's current upturn is
largely pulled by Apple's products, and not so much by a general
strengthening of global electronic demand. Once the product
launches are over, orders placed with Taiwanese manufacturers could
take a hit.
The agency expected the consumer-price index will rise 1.64%
this year. It is higher than its previous estimate 1.53% but still
within the central bank's tolerance of 2%. That means the central
bank may keep its monetary policy accommodative to promote economic
growth, analysts say.