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Manufacturing sector is positive on economic outlook
Service sector remains confident in domestic recovery |
TIER’s latest forecast for the Taiwanese GDP in 2011 is 5.72% (see figure 2), above average from major forecasting agencies.
Among the GDP components, fixed capital formation is likely to remain a key driver for growth, be it at a negligible rate. Since the onset of the financial crisis, the Taiwanese Government has increased fiscal stimulus through various infrastructure and public construction projects, which has accounted for much of the investment growth in 2010. The stimulus package is now at the end of its designed shelf life and while its positive contribution is likely to linger, its direct contribution to the GDP will not. The private sector investment is also expected to witness a similar pattern. As global demand recovers, businesses are picking up investments which were stalled during the Financial Crisis. The high-tech sector in particular, was at the forefront of the investment drive. That said, the capital expenditure cycle is drawing to a close and investments drive in 2011 is likely to dissipate. TIER expects fixed capital formation to contract by 0.12% in 2011.
Private consumption, which has been a lagging growth component since the new millennium, is expected to be more robust in 2011. The various stimulus measures from the Government since 2009 as well as the current loose monetary policy are likely to stimulate spending well into 2011. Moreover, policy stimulus such as direct flights between China and Taiwan and the new trade pact (ECFA) between China and Taiwan are likely to increase domestic market activities. The increased foreign visitors are likely to promote more service sector activities and improve job market prospects. All of which will translate to a higher domestic spending. TIER expects private consumption to grow by 3.65% in 2011.
The recovering global economy is also likely to boost Taiwan’s external sector. Latest available surveys indicate an expansion in the manufacturing output in most export-led economies, which is consistent to TIER’s manufacturing sector survey. With demand recovering in both Europe and the US, as well as continuing growth in the emerging markets, the output growth is likely to remain solid in 2011. TIER expects export for Taiwan to expand by 11.19% and imports by 10.81% in 2011, with a trade surplus of USD 26.80 billions.
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| Singapore and Taiwan begin Free Trade Agreement (FTA) talks |
| Singapore and Taiwan started free trade agreement negotiation in May and plan to complete the negotiation within a year. Taiwan's Government believes the Taiwan-China trade pact (ECFA) will pave the way for similar talks with other countries. Apart from Singapore, the Philippines and India have also taken steps forward to initiate free trade discussions with Taiwan. The talks between Singapore and Taiwan were said to be focused on tariffs, the opening of the service sector and economic partnerships.
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| Taiwan aims to minimise economic fallouts from the S. Korea-EU Free Trade Agreement (FTA) |
| Taiwan will try to minimise the negative impacts of a FTA between South Korea and European Union, said Shih Yen-shiang, Minister of Economic Affairs. The FTA is likely to hurt Taiwan's export to Europe, especially in the manufactures of electric machinery, plastics, automobiles, and steel. According to a report published by TAITRA, the Korea-EU FTA will take its effect in July this year, which will make Taiwanese product 16% to 55% more expensive in Europe. |
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Taiwan Economic Research Monthly
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Taiwan’s opportunities and challenges in response to a growing world economic power shift and structure reform
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The state of global economy and its influences on the APEC Growth Strategy
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A review on U.S.-China relations after Hu's visit to the U.S. in January
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The perspective Trans-Pacific Economic Partnership (TPP) on strengthening economic cooperation in Asia-Pacific region
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A study on regulatory cooperation and convergence between the APEC economies and their enterprises
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