TAIPEI: The nation’s export-oriented economy could expand a mild 2.1 percent next year, as advanced markets undergo a small recovery, while emerging markets avoid a hard landing, Fubon Financial Holding Co said yesterday.
There is no evident concern or excitement on the horizon next year, when the economies in the US, Europe and Japan may grow 2.4 percent, 1.6 percent and 0.8 percent respectively, Fubon Financial said in a report.
China, the main destination for Taiwanese exports, could continue to slow with GDP growth of 6.6 percent, creating further challenges for raw material prices and outbound shipments, the nation’s second-largest financial services provider said.
The weak economic showing at home this year suggests a low comparison base for next year when the economy would fare better with 2.1 percent growth, Fubon Financial economist Rick Lo said.
The forecast is slightly lower than a forecast by the Directorate-General of Budget, Accounting and Statistics on Friday last week of a 2.32 percent growth.
The decline in crude oil prices could taper off going forward in light of ultra-low prices, but the price might not see much of a comeback due to soft demand, Lo said, forecasting that crude would hover at between US$40 and US$60 a barrel.
Downside risks such as interest rate increases by the US Federal Reserve, China’s hard landing and the persistent slump in raw material prices could upset the growth projection, Lo said.
Schive Chi, a special economist at Fubon Financial, cautioned that more local manufacturers might move their production facilities to Southeast Asian nations to take advantage of low tariffs due to Trans-Pacific Partnership (TPP) membership. Taiwan’s failure to join the regional trade block in the foreseeable future would weaken its competitiveness, he said.
The lack of breakthrough innovations in mobile devices would also limit growth, as Taiwan is home to the world’s largest contract chipmakers, chip designers and suppliers of critical components, he said.