Sunday, December 18, 2011

Taiwan's economic prospects in 2012

* Looking ahead to 2012, Taiwan government has made a rather optimistic forecast of the gross domestic product (GDP) to grow 4.3 percent. But many private research institutions have put up growth projections ranging from 3.3 to 3.7 percent next year.

* On the other hand, some expect Taiwan’s economy to turn around in March 2012, but there is limited evidence to support such an assertion since outlook for the European and US markets remain uncertain.

* Depending on a number of internal and external factors, particularly the results of the January elections and developments in cross-Strait relations, it remains possible for Taiwan’s GDP to meet, or possibly exceed, government expectation.

* However, based on the fact that leading economic indicators, released by the Council for Economic Planning and Development (CEPD), have been declining for six months in a row, the government agency has downgraded the economy to a yellow-blue light, which represents sluggishness for three consecutive months.

* At the same time, with consumption expected to grow 3.5 percent and private investment at 5 percent next year, domestic demand will contribute 55 percent to next year's GDP and exports only 45 percent. As such, the likelihood for Taiwan’s Central Bank to lower rates during its upcoming board meeting at the end of December remains high.

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Wednesday, December 14, 2011

Taiwan’s exports continued to decline in November

* According to figures released by the Ministry of Finance (MOF), Taiwan's exports came in at US$24.68 billion in November, which amounted to a decline of 8.7 percent from October.

* Imports were US$21.47 billion last month, which was a decline of 10.4 percent year-on-year and 9.4 percent month-on-month. These figures translated into a trade surplus of just US$3.2 billion for November, which was markedly lower than expected.

* Many expect the most difficult period for Taiwan’s exporters to be the first quarter of next year. The key, in turn, to whether things will get better include: (1) if the European sovereign debt crisis can get resolved, and (2) US economic recovery gets additional boost, particularly in the job and housing markets.

* If international circumstances do not improve, the adverse impact on the island’s economy, particularly exports, could last well into mid-year 2012.

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Friday, December 9, 2011

Deficit in Taiwan’s balance of payment

* Taiwan’s overall balance of payments registered its first quarterly deficit—from July to September—in three years as foreign investors reduced their holdings in local stocks and bonds.

* In fact, Taiwan’s balance of payments ran a deficit of US$3.46 billion for the quarter, which was the first since the third quarter of 2008 when the world economy was hit with a global financial meltdown.

* Besides the sovereign debt crisis in Europe, declining exports and investment slowdown were also responsible for the balance of payments deficit, estimated to be US$2.6 billion for the year.

* Although both exports and imports recorded slower growth, Taiwan's trade surplus nevertheless increased roughly by US$800 million year-on-year to US$7.71 billion. However, unless a solution is reached soon to resolve the European debt crisis, the outlook for the fourth quarter this year is not particularly encouraging.

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