The surge in exports and gross fixed capital formation growth resulted in Taiwan's 2016 real GDP expanding by 1.4%, slightly above our forecast of 1.1%.We expect export growth to slow over the coming quarters amid external uncertainties and the ongoing slowdown in China. However, the 2017 Universiade games and the gradual diversification of tourist arrivals will lend support to the economy. The...
We maintain our slightly bullish outlook on the TWD over the coming months, with the currency supported by a positive technical picture. Over the long-term, we expect a gradual appreciation as a strong external position, a relatively sound fiscal outlook, and an undervalued exchange rate lend support to the currency. Yuan depreciation poses the main downside risk to our view.
In line with our expectations, the CBC held its discount rate at 1.375% during its monetary policy meeting on December 22. With inflation likely to remain manageable and growth appearing to be showing signs of recovering, we expect the central bank to remain on hold throughout 2017 as it seeks to provide support to the economy amid a still-weak housing market.
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Thanks, BMI Research