We retain our cautiously optimistic consumer outlook for Taiwan as the country's highfrequencyindicators point to a sustained economic recovery. In addition to the brightening economicoutlook, tight labour market, rising real wages and subdued inflation will support a gradually acceleratingdemand across all consumer sectors, particularly in the non-essentials segments. That said, the highlydeveloped nature of the market limits the scope for substantial gains over the long term.
Taiwan's high-frequency indicators point to a continued economic recovery in 2017. In seasonally adjustedannualised quarter-on-quarter terms, Taiwan's economy grew by 2.9% in Q117, accelerating considerablyfrom the 1.8% in the previous quarter. Strong demand for the country's exports - particularly the electronicsgoods - combined with greater internal political stability and government's attempts to improve businessenvironment suggest the economy will continue to improve. According to the data from the Ministry ofEconomic Affairs, retail sales have been recovering as well, averaging 1.0% growth during the past threemonths. A positive economic and political outlook could translate into stronger retail sales towards thesecond half of the year.