5G Boosting Electronics Sales Factor for Uptick GDP Revision: SinoPac

Financial organizations are largely optimistic regarding Taiwan's economic performance by revising up their economic growth predictions.

Analysts say the key is in the domestic and outbound demand rising in tandem and increasing demand for new technologies like 5G applications that have buoyed electronic product orders.

However, economists at two international banks pointed out that Taiwan's economic revival would not be linear. DBS Bank suggested Taiwan's economy bounce-back to move from a V-shaped revival to a square root resurgence. In contrast, Standard Chartered Bank suggested a similar recovery process but riddled with uncertainty.

Standard Chartered Bank Northeast Asia's Senior Economist Tony Phoo stated Taiwan's economic bounce-back would depend on the global economy. Even with the vaccines made available, returning to pre-pandemic circumstances could still take two to three years. Phoo was speaking at the Taiwan Institute of Economic Research 2021 Economic Forecast and Industry Trend Seminar.

DBS Bank Senior Economist Ma Tieying said Taiwan's Q3 GDP data had exceeded expectations; she pointed to net exports bolstered by global demand for electronic products as the primary reason. The third quarter was the first quarter to return to positive territory. However, while consumption remains in the negatives in yearly growth, Ma said the relaxation of pandemic restrictions in June had helped turn consumption growth to positive numbers in Q3.

Domestic bank Sinopac Financial showed more optimism regarding Taiwan's economy, citing three factors: new emerging technologies have helped improve exports, production, and sales; the stimulus coupons bolstering consumption; and third, results bearing fruit under the government-led invest in Taiwan programs, including fast-tracked public infrastructure. With the economy entering the holiday season, the local bank believes domestic demand will continue to perform.