Taiwan

RGE's Q3 2010 Taiwan Outlook

Taiwan’s recovery from the trough of Q2 2009 has been remarkable, prompting us to again revise our forecast for its GDP growth: to 6.8% in 2010, up from 5.5% in our previous Outlook. The revision is largely due to a swing in our expectations for Taiwan’s net exports and restocking. Though we previously believed net exports' contribution to GDP would contract slightly in 2010 from 14% in 2009, weak private consumption has kept Taiwan’s domestic demand muted, despite strong investment demand, and should result in a slight expansion of net exports that may continue into 2011. Demand from China, the U.S and EU will wane over the course of 2010, however, tempering GDP growth. Weaker-than-expected private consumption and a slowdown in capital inflows have led us to reduce our forecast for inflation this year. We now expect the CPI to average 1.2% in 2010, though we maintain our forecast for two additional 12.5 basis point (bp) rate hikes this year, following the hike in Q2.

Read the Q3 2010 Taiwan Outlook