Taipei, U.S-based ratings agency Standard and Poor's has raised its forecast for gross domestic product (GDP) growth in Taiwan for 2018 to 2.8 percent, citing the nation's strong export performance.
The latest GDP growth forecast released by S and P on Friday represented an upward revision from its earlier forecast of 2.4 percent made in January. The ratings agency has also predicted Taiwan's economy will grow 2.5 percent in 2019.
S and P joined a growing list of economic research groups to have raised their forecast for Taiwan's 2018 economic growth.
The upgrade came after the Directorate General of Budget, Accounting and Statistics (DGBAS) reported on Tuesday that Taiwan's GDP for the second quarter of this year grew 3.29 percent from a year earlier, beating the DGBAS estimate of 3.08 percent in May, citing solid outbound sales and private consumption.
S and P said Taiwan's export oriented economy is highly correlated with the global economy which has been recovering, boosting demand.
The ratings agency said over the past 10 years, Taiwan's economic growth has remained between 2-3 percent annually.
S and P said Taiwan has a vibrant economy with a private business sector that is highly innovative, while the government has promoted flexible economic development policies, lending further support to economic fundamentals.
While the ratings agency upgraded its GDP forecast for Taiwan, S and P also warned that lingering trade friction between the United States and China could still hurt the pace of Taiwan's economic growth.
In the first six months of this year, China remained the largest buyers of Taiwan's goods, while the U.S. ranked third, trailing the Association of Southeast Asian Nations (ASEAN) bloc, according to data compiled by Taiwan's Ministry of Finance.
S and P said while ties across the Taiwan Strait have cooled since the pro-independence Democratic Progressive Party came to power in May 2016, the chance of any conflict between Taipei and Beijing remains slim. Currently, strong global demand is offsetting the impact on Taiwan of slowing economic ties between Taipei and Beijing, S and P added.
After the upgrade, S and P's forecast is more upbeat than several other think tanks and even the Taiwan government.
Institutions such as Academia Sinica, Taiwan Institute of Economic Research, Chung-Hua Institution for Economic Research, Yuanta-Polaris Research Institute and Fubon Financial Holding Co., have forecast that Taiwan's economy will grow 2.48-2.68 percent in 2018.
The DGBAS said it is likely to raise its forecast for GDP growth from 2.60 percent to around 2.65 percent after the strong showing in the second quarter.
Source: Focus Taiwan News Channel