Taipei, The Taiwan Institute of Economic Research (TIER), a research unit focused on macroeconomics, has revised its economic growth forecast for Taiwan in 2021 to 4.3 percent, up 0.29 percentage points from its previous projection in November 2020.
The revision resulted from Taiwan’s strong exports, bullish stock market, and planned capital expenditures by Taiwan Semiconductor Manufacturing Co. (TSMC) that are higher than expected, TIER head Chang Chien-yi (張建一) told CNA on Monday after the release of the report with the new projection.
TSMC, the world’s largest contract chipmaker, announced in mid-January that its capital spending for 2021 will fall between US$25 billion and US$28 billion, 45 percent higher than the US$17.2 billion spent last year.
The expenditures are expected to stimulate private investment and boost Taiwan’s overall economic performance, Chang said.
Although a domestic COVID-19 cluster infection arose in northern Taiwan last week, the TIER believed the pandemic would not affect the economy over the longer term.
“We need to watch how the pandemic develops. But countries around the globe have learned to make short-term sacrifices in exchange for the long-term good,” the think tank said.
In the same report, the TIER said Taiwan’s manufacturing sector composite indicator, which gauges business sentiment among manufacturers, rose 3.24 points to 106.21 in December 2020, the highest level since October 2007.
According to the survey, the continued expansion of the Purchasing Managers’ Index (PMI) in Europe, remote opportunities created by the pandemic, and higher demand for Taiwan-made semiconductors due to emerging 5G technologies, led to the positive outlook for Taiwan’s manufacturing sector.
The composite indicator for the service sector, meanwhile, edged slightly lower by 0.02 points to 96.52 while that of the construction sector fell 0.27 points to 108.96 in the same month.
There are three major uncertainties that could affect Taiwan’s economic outlook, the TIER said — administration rate and efficacy of COVID-19 vaccines; uneven growth among economies amid the pandemic, and U.S.-China relations during the Biden administration.
Source: Focus Taiwan News Channel