Economic Analysis - Upgrading Growth As Export Outlook Improves - NOV 2017


BMI View: Taiwan ' s economy grew by 2.1% y-o-y in Q217, bringing H117 growth to 2.4% y-o-y, and we are upgrading our 2017 real GDP growth forecast to 2.2% from 2.0% previously. Strong demand from the electronics sector is likely to be the main driver of both export growth and investment in the semiconductor sector. In addition, the government's infrastructure development plan will provide support while improving Taiwan's logistics network.

Taiwan's real GDP expanded by 2.1% y-o-y in Q217, bringing H117 growth to 2.4% y-o-y. On a q-o-q seasonally adjusted (SA) basis, the economy grew by 0.2%, marking a slowdown from the 0.9% rate recorded in the previous quarter largely due to a decline in gross fixed capital formation. In light of the economy's better than expected performance so far, we are upgrading our 2017 real GDP growth forecast to 2.2% from 2.0% previously (with real GDP having expanded by 1.5% in 2016). Strong demand from the electronics sector is likely to be one of the main drivers of growth over the coming quarters amid continued global demand for semiconductors. We expect this, in addition to the government's ongoing plans to develop a Taiwan Silicon Valley, to be positive for both R&D and investment in the sector as Taiwanese electronic firms continue to expand production capacity amid high semiconductor prices. Furthermore, the government's infrastructure development plan will enable the continued development of Taiwan's logistics network as well as provide some support for the construction industry.

Bright Semiconductor Outlook Positive For Exports

Exports A Key Driver Of Growth
Taiwan - GDP By Expenditure, % chg y-o-y
Source: BMI, DGBAS

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