Taipei. Taiwan raised its 2017 economic growth target to a three-year high on Wednesday (15/02), on expectations it will benefit from stronger global demand for tech gadgets though growing signs of United States trade protectionism remain a downside risk.
Gross domestic product was estimated to expand 1.92 percent in 2017, higher than the 1.87 percent forecast in November and 1.88 percent projected in August, the Directorate General of Budget, Accounting and Statistics said.
Solid demand expected for Apple's new iPhone 8 and Chinese smartphone brands will bolster the island's export-driven economy, building on the strengthening momentum in the fourth quarter ahead of the festive season.
"Export momentum is expected to get a boost from the manufacturing process advantage of the local semiconductor industry, as well as increasing demand for vehicle electronics, Internet of Things and high-efficiency computing," the statistics agency said in a statement.
Taiwan's chip companies play a major role in the global manufacturing supply chain and the island's export orders rose for a fifth straight month in December.
Exports from South Korea, a close rival of Taiwan, rose in January at the fastest pace in nearly five years, preliminary data has shown.
Taiwan's statistics agency also revised up fourth quarter economic growth to 2.88 percent, its strongest pace since the first quarter of 2015. Its preliminary figure showed the economy grew 2.58 percent from a year earlier.
For 2017, exports were forecast to grow a much faster 8.5 percent, higher than the 4.95 percent anticipated in November.
"The outlook for exports is more optimistic this year, with demand from the United States and China both looking strong. The outlook for domestic consumption is relatively conservative," Chen Chin-chi said, an analyst at Cathay Financial Holdings.
"The key things to watch are the economic growth rates of the United States and China," Chen added.
Taiwan's exports are widely expected to take a hit if US President Donald Trump implements more protectionist trade and economic policies later this year.
"[...] some limiting factors for growth are the increasing competition of global industries, rising global trade protectionism, and increasing pressure from the Chinese supply chain's localization," the statistics agency said.
Imports, mainly from investments in the semiconductor sector, are forecast to grow 9.77 percent this year, versus the previous forecast of 5.79 percent.