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Taiwan: Country Economic Forecast: 17 May 2013

11 Pages Oxford Economics May 17, 2013 SKU: OFE5056988

GDP in Q1 was much weaker than expected, falling 0.8% on the quarter and with year-on-year growth slowing sharply to 1.5%. Private consumption rose just 0.4% on the year while net exports were a drag on overall growth. Disappointing trade data and a manufacturing PMI only just above 50 suggest that the weakness of the economy persisted in March and April. Given the sluggish start to the year and our recent downward revision to Chinese growth, we now expect Taiwan to grow by 2.8% this year, compared with 3.6% last month. We still see a strengthening in the economy in 2013H2, mainly due to a gradual pick-up in global trade, but this is likely to be weaker than previously estimated. And we now forecast GDP growth of 3.9% in 2014, down from April’s forecast of 4.2%. Inflation was 1% in April, down from 1.8% in Q1, and is expected to average 1.5% in 2013 as a whole. This, combined with a sound labour market, will support real wages and household consumption. Given the subdued Q1, private consumption will grow by just 1.7% this year, before increasing by almost 4% in 2014. In the light of the low level of inflation and the weak demand-side pressures, we expect the central bank to leave policy on hold this year and now forecast that the first interest rate hike will not be until 2014Q2.

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Taiwan: Country Economic Forecast: 17 May 2013

Oxford Economics
May 17, 2013

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