Taiwan’s economy could have expanded 1.42 percent last quarter, reversing a 0.58 percent decline three months earlier, thanks to a rebound in domestic consumption and robust external demand, Australia and New Zealand Banking Group (ANZ) said yesterday.
The projection is more sanguine than a consensus market expectation of a 0.1 percent contraction and came one week before the Directorate-General of Budget, Accounting and Statistics is scheduled to report on third-quarter performance on Friday next week.
The government in July issued NT$50 billion (US$1.73 billion) of Triple Stimulus Vouchers that were intended to boost private consumption by NT$111.2 billion, or 0.6 percent of GDP, ANZ said, adding that it is positive about the economy going forward, supported by positive economic bellwethers.
The manufacturing purchasing managers’ index last month rose to 55.3, while industrial production grew 10.73 percent year-on-year, government data showed.
“For this year, we believe Taiwan will remain an outperformer compared to its regional peers in GDP growth,” ANZ said.
As economic activity picked up among key trading partners, Taiwan’s export orders gained 12.4 percent and 13.6 percent year-on-year in July and August respectively, ANZ said.
The local stock market also put in a strong showing compared with other markets due to a high weighting of technology stocks and a fast local recovery from the COVID-19 pandemic, ANZ said.
Equities in Taiwan, China, Hong Kong and South Korea have outperformed shares in the rest of the region, as technology shares account for more than 30 percent of the market in Taiwan and South Korea, ANZ said.
“This solid performance can continue, as valuations are reasonable for an early stage of a recovery, while liquidity is generous,” it said, noting that there has also been a drop in volatility.
The strong performance of Asian equities and the resulting foreign participation bodes well for Asian currencies, it said.
In related news, exports posted a 6 percent gain year-on-year during the third quarter, beating the 1.1 percent increase the government predicted in August, the Ministry of Finance said.
Demand for electronic products, particularly advanced chips, proved stronger than expected, as ongoing migration to 5G lent support and China’s Huawei Technologies Co (華為) aggressively stockpiled inventory ahead of US sanctions.
Imports, by contrast, shrank 1.5 percent, due to cheaper fuel and raw material prices, giving the nation a hefty trade surplus, the ministry said.
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