Taiwan’s Economy Exits Recession on Global Recovery (Update3)
February 22, 2010, 03:34 AM EST
By Chinmei Sung and Yu-Huay Sun
Feb. 22 (Bloomberg) -- Taiwan’s economy exited the deepest recession on record last quarter as the global recovery spurred demand for the island’s semiconductors and mobile phones.
The emergence of the world economy from the worst slump since World War II encouraged companies in Taiwan, where exports equal half of GDP, to boost production and hire more workers. President Ma Ying-jeou is negotiating a trade accord with China that would cut import duties on Taiwanese goods in the world’s fastest-growing major economy and help cement the recovery.
“Taiwan’s economy is benefiting from a moderate recovery globally and most significantly, rising demand from China,” said Wai Ho Leong, an economist at Barclays Plc in Singapore. “The economy will continue to be boosted by orders from China for the rest of the year with the proposed trade agreement, which will reduce the cost of trade.”
Taiwan’s exports to China, its biggest trading partner and No. 1 overseas investment destination, soared 187.8 percent in January from a year earlier, after a 96.7 percent gain in December. Shipments to the U.S., the second-largest export market, rose 13.7 percent after increasing 4 percent in December.
Stocks, Currency
Today’s GDP figure was released after the close of trading on the stock exchange. The Taiex index climbed 1.6 percent to 7,560.04. The index jumped 78 percent last year, the best result in 16 years. The Taiwan dollar was little changed at NT$32.099 against its U.S. counterpart at the close of trading, according to Taipei Forex Inc.
Stronger demand for electronics helped Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp., the world’s largest makers of custom chips, post fourth-quarter profits that beat analysts’ estimates and encouraged them to boost capital spending this year.
Taiwan’s economy is emerging from the worst recession since records began in the 1950s. Central Bank Governor Perng Fai-nan kept interest rates unchanged at a record-low 1.25 percent on Dec. 24, after slashing them by 2.375 percentage points from September 2008 to February 2009 to revive the economy.
Taiwan’s economy contracted a revised 0.98 percent in the third quarter, from an earlier estimate of 1.29 percent, the statistics bureau said today. It raised its 2010 growth forecast to 4.72 percent from 4.39 percent.
‘Big Spike’
“Taiwan suffered more severely from the global downturn than other regional countries, thereby, we saw a big spike in the fourth quarter,” Shih Su-mei, chief statistician at the Cabinet’s Directorate General of Budget, Accounting and Statistics, told reporters in Taipei today.
Consumer prices for the year will probably rise 1.27 percent, from an earlier forecast of 0.92 percent, and exports will likely increase 20.91 percent this year, the bureau said.
“Our economy is recovering because of a surge in industrial production,” said Tigr Cheng, an economist at Polaris Securities Co. “However, our jobless rate and internal consumer demand are still not ideal, so the central bank will not be raising interest rates any time soon.”
Unemployment Rate
Taiwan’s unemployment rate fell for a fifth month in January to 5.73 percent, after reaching 6.04 percent in August. Taiwan Semiconductor, the island’s biggest company by market value, said it plans record spending this year and will add more than 3,000 engineers.
President Ma’s administration has been pushing for the trade agreement with China to prevent Taiwan from being “marginalized” after a Chinese accord with the 10-member Association of Southeast Asian Nations took effect this year.
China and Taiwan have been ruled separately since Nationalist troops fled to the island after losing a civil war to Mao Zedong’s Communist forces in 1949. China has threatened to invade Taiwan if it declares formal independence, and in 2006 carried out a weeklong series of missile tests near the island.
The government estimates the so-called Economic Cooperation Framework Agreement with China would increase GDP by 1.65 to 1.72 percentage points annually, spurring exports and creating more than 260,000 jobs. Exports would rise as much as 5 percent a year and imports by 7 percent, it says.
The opposition is against signing the accord and is calling for a public referendum. The Democratic Progressive Party on Dec. 20 rallied 100,000 people into the streets of Taichung city to protest Ma’s China policies, on concern that they will erode the island’s sovereignty.
February 22, 2010, 03:34 AM EST
By Chinmei Sung and Yu-Huay Sun
Feb. 22 (Bloomberg) -- Taiwan’s economy exited the deepest recession on record last quarter as the global recovery spurred demand for the island’s semiconductors and mobile phones.
The emergence of the world economy from the worst slump since World War II encouraged companies in Taiwan, where exports equal half of GDP, to boost production and hire more workers. President Ma Ying-jeou is negotiating a trade accord with China that would cut import duties on Taiwanese goods in the world’s fastest-growing major economy and help cement the recovery.
“Taiwan’s economy is benefiting from a moderate recovery globally and most significantly, rising demand from China,” said Wai Ho Leong, an economist at Barclays Plc in Singapore. “The economy will continue to be boosted by orders from China for the rest of the year with the proposed trade agreement, which will reduce the cost of trade.”
Taiwan’s exports to China, its biggest trading partner and No. 1 overseas investment destination, soared 187.8 percent in January from a year earlier, after a 96.7 percent gain in December. Shipments to the U.S., the second-largest export market, rose 13.7 percent after increasing 4 percent in December.
Stocks, Currency
Today’s GDP figure was released after the close of trading on the stock exchange. The Taiex index climbed 1.6 percent to 7,560.04. The index jumped 78 percent last year, the best result in 16 years. The Taiwan dollar was little changed at NT$32.099 against its U.S. counterpart at the close of trading, according to Taipei Forex Inc.
Stronger demand for electronics helped Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp., the world’s largest makers of custom chips, post fourth-quarter profits that beat analysts’ estimates and encouraged them to boost capital spending this year.
Taiwan’s economy is emerging from the worst recession since records began in the 1950s. Central Bank Governor Perng Fai-nan kept interest rates unchanged at a record-low 1.25 percent on Dec. 24, after slashing them by 2.375 percentage points from September 2008 to February 2009 to revive the economy.
Taiwan’s economy contracted a revised 0.98 percent in the third quarter, from an earlier estimate of 1.29 percent, the statistics bureau said today. It raised its 2010 growth forecast to 4.72 percent from 4.39 percent.
‘Big Spike’
“Taiwan suffered more severely from the global downturn than other regional countries, thereby, we saw a big spike in the fourth quarter,” Shih Su-mei, chief statistician at the Cabinet’s Directorate General of Budget, Accounting and Statistics, told reporters in Taipei today.
Consumer prices for the year will probably rise 1.27 percent, from an earlier forecast of 0.92 percent, and exports will likely increase 20.91 percent this year, the bureau said.
“Our economy is recovering because of a surge in industrial production,” said Tigr Cheng, an economist at Polaris Securities Co. “However, our jobless rate and internal consumer demand are still not ideal, so the central bank will not be raising interest rates any time soon.”
Unemployment Rate
Taiwan’s unemployment rate fell for a fifth month in January to 5.73 percent, after reaching 6.04 percent in August. Taiwan Semiconductor, the island’s biggest company by market value, said it plans record spending this year and will add more than 3,000 engineers.
President Ma’s administration has been pushing for the trade agreement with China to prevent Taiwan from being “marginalized” after a Chinese accord with the 10-member Association of Southeast Asian Nations took effect this year.
China and Taiwan have been ruled separately since Nationalist troops fled to the island after losing a civil war to Mao Zedong’s Communist forces in 1949. China has threatened to invade Taiwan if it declares formal independence, and in 2006 carried out a weeklong series of missile tests near the island.
The government estimates the so-called Economic Cooperation Framework Agreement with China would increase GDP by 1.65 to 1.72 percentage points annually, spurring exports and creating more than 260,000 jobs. Exports would rise as much as 5 percent a year and imports by 7 percent, it says.
The opposition is against signing the accord and is calling for a public referendum. The Democratic Progressive Party on Dec. 20 rallied 100,000 people into the streets of Taichung city to protest Ma’s China policies, on concern that they will erode the island’s sovereignty.