TAIPEI - Although Taiwan recently showed signs of a gradual recovery, British bank Barclays on Friday cut its forecast for Taiwan's economic growth in 2013 to 2.2 per cent from a previous estimate of 3 per cent.
Due to lower-than-expected growth in the first half, Barclays yesterday announced a 0.8-per cent cut to its forecast for Taiwan's gross domestic product (GDP) growth rate, dropping the figure to 2.2 per cent, while leaving unchanged the 2014 GDP growth forecast at 3.7 per cent.
After seasonal adjustments, Barclays said, Taiwan's GDP for the April-June period rose 0.6 percentage points from the previous quarter.
After talking with Taiwanese manufacturers, Barclays said that Taiwanese manufacturers, while trimming down inventory, are on high alert for a momentum shift tied to this year's back-to-school boom and Black Friday shopping spree.
On the back of external demand, mainly boosted by smartphone- and seminconductor-related shipments, Taiwan's export continued with modest growth while domestic demand was propped up by an increase in the number of mainland tourists, Barclays said.
However, a downtrend in business investment suggested that businesses are cautious about the global economic recovery, said Barclays.
On July 31 Taiwan announced an annual GDP growth of 2.27 per cent for the second quarter of this year, beating an earlier estimate of a 1.98-per cent increase.
The Directorate General of Budget, Accounting and Statistics (DGBAS) under the Executive Yuan did not revise its forecast of Taiwan's GDP growth for 2013, maintaining a previous estimate of 2.4-per cent growth, which it made in May.
Bank of America Merrill Lynch recently said that it is maintaining its forecast for Taiwan's GDP growth in 2013 at 2.7 per cent.
US growth optimism, robust demand in the Association of Southeast Asian Nations (ASEAN) and a potential eurozone bottoming out should bolster Taiwan's exports for the rest of this year, and will likely offset the downside risks posed by China's slowdown in the near term, a Merrill Lynch analyst said in a research note to clients.
However, Merrill Lynch said it still sees risks from domestic demand weaknesses, as imports of capital goods slowed, while consumer goods will likely be subdued by falling real wages.
By contrast, J.P. Morgan Chase and Co. has revised upward its forecast for Taiwan's full-year 2013 GDP growth to 2.3 per cent from an earlier projection of 2 per cent, after taking into account second-quarter GDP figures.
J.P. Morgan said it continues to expect a lift in global economic activity going into the second half of 2013, backed by the lift in global consumer spending in response to lower inflation.
This more constructive outlook toward the global economy in the second half - especially for the developed markets - will likely provide some support for Taiwan's export and industrial sectors going forward, J.P. Morgan said.