Feb. 23 (Bloomberg) -- Taiwan raised its growth forecast for the year after the economy grew more than initially estimated last quarter, as exports and consumption recovered.
Gross domestic product rose 3.72 percent in the three months through December from a year earlier, the statistics bureau said in a statement in Taipei yesterday. That compares with a preliminary estimate of 3.42 percent and a median of 3.4 percent in a Bloomberg survey of 11 economists. The bureau raised its 2013 GDP forecast to 3.59 percent from 3.53 percent.
Taiwan President Ma Ying-jeou this month reshuffled his Cabinet as he seeks to bolster his approval rating and strengthen the economy, which last year grew at the slowest pace in three years. Closer trade and investment ties with China have boosted growth prospects for the island, which joined Singapore yesterday in reporting faster-than-estimated expansion in a sign the region is recovering from a global slowdown.
“The revised estimate is consistent with what we have observed over the past few months, which is that the growth momentum has picked up on the back of the improving global economy,” said Raymond Yeung, a Hong Kong-based senior economist at Australia & New Zealand Banking Group Ltd. “The outlook stays positive, with the global trade outlook very supportive of these small export-oriented economies.”
The benchmark Taiex stock index closed 0.1 percent lower yesterday before the report. The Taiwan dollar rose to NT$29.658 against its U.S. counterpart, according to Taipei Forex Inc. It is the worst performer this year after the Japanese yen among 11 widely-traded Asian currencies tracked by Bloomberg.
Ma, battling an approval rating of 14 percent, earlier this month promoted Vice Premier Jiang Yi-Huah to Premier and re- appointed central bank Governor Perng Fai-nan to a fourth five- year term, suggesting continued stability for the island’s currency and protection for its exporters.
An August pact on cross-strait currency clearing paved the way for Taiwan to host the world’s second offshore yuan exchange rate. This month the island allowed domestic lenders to conduct yuan business and let Chinatrust Commercial Bank sell and list Taiwan’s first yuan-denominated bonds, following similar listings in Hong Kong and London.
The central bank left the benchmark rate unchanged at 1.875 percent in December after inflation eased from a four-year peak. The monetary authority has held borrowing costs since June 2011.
“The central bank has largely priced in the stronger-than- estimated growth and it won’t affect its monetary stance very much,” said Yeung, adding that he expects the central bank to hold borrowing costs in its next meeting in March.
The statistics bureau yesterday said the economy expanded a revised 0.73 percent in the third quarter and grew 1.26 percent in 2012. Export growth may be 6.23 percent this year, more than a previous prediction of 6.07 percent.
“The recovering economy has prompted firms to increase hiring, thus improving the job market and boosting consumer confidence,” the bureau said in a statement. “The launches of new electronics are also helping domestic consumption.”
Overseas sales climbed 21.8 percent in January from a year earlier, rising for a third straight month, government data showed. Shipments to China, the island’s largest trading partner, advanced 34.8 percent last month from a year ago.
Export orders, an indicator of sales in the next one to three months, climbed for a fourth month in December, with Formosa Petrochemical Corp., Taiwan’s biggest fuel exporter, reporting January revenue rose 25 percent from a year earlier.
The bureau also raised its inflation forecast for the year to 1.37 percent from 1.31 percent, with pressure seen from higher minimum wages and a planned electricity tariff increase.
--With assistance from Adela Lin in Taipei and Ailing Tan and Sharon Chen in Singapore. Editors: Rina Chandran, Debra Mao