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Taiwan raised its growth forecast for this year and next as ravenous global demand for semiconductors looks set to underpin its strongest growth in more than a decade.
Officials raised their outlook for full year gross domestic product growth to 6.09%, up from their most recent forecast of 5.88%, according to a statement from the government’s statistics bureau. That would be the fastest pace of growth since the economy grew more than 10% in 2010 in the wake of the global financial crisis.
The government forecast is in line with the 6% median estimate in a Bloomberg survey of 33 economists.
Taiwan’s manufacturers, such as leading chipmaker Taiwan Semiconductor Manufacturing Co., have been running their production lines at close to full capacity for much of the year to meet pent-up international demand for electronic components as countries reopen their economies in the aftermath of the Covid-19 pandemic.
The economy is likely to expand 4.15% in the fourth quarter after growing a revised 3.7% in the June-September period, the statement said.
Surging exports and capital expenditure as companies splurge on expanding their production capacities have been the main contributors to economic growth so far this year and are the main reason for Friday’s upgraded GDP outlook, according to the statistics bureau.
“Private investment is expected to grow 18.88% this year, which would be the highest since it rose 27.34% in 2010,” Tsai Hung-kun, the deputy head of the government’s statistics department, said in a briefing Friday. “Private investment is the key factor in judging whether an economy will be strong in the future or not.”
But Friday’s figures show these drivers will likely begin to ease off next year.
The new coronavirus variant that rattled global markets Friday is a new concern that could affect economic growth, in addition to supply chain bottlenecks and inflation concerns, the bureau’s statement said.
(Updated with additional comments from officials in sixth, seventh and ninth paragraphs.)
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