Boston, MA -- (SBWIRE) -- 08/01/2013 -- Our growth forecasts for 2013 stands at 3.0%, which remains below a Bloomberg consensus of 3.4%.

While the contraction in Taiwan's economy in Q113 surprised to the downside, it reaffirms our relatively less sanguine expectations of Taiwan's economic growth prospects for the rest of the year. We have started to witness incipient signs that the economic pick up that started in the latter stages of 2012 may be starting to wane. That said, we highlight some upside risks in the rebound in homebound investment as well as a current spate of new product launches in the global tech industry.

While we expect monetary policy to remain accommodative, we do not expect Taiwan's central bank to follow in the footsteps of Japan and undertake aggressive monetary easing. On top of already having sufficient liquidity in the economy, aggressive easing is likely to lead to considerable speculative consequently volatility in the currency markets. We expect the central bank to maintain the benchmark 10-day discount rate at its current level through the rest here.

View Full Report Details and Table of Contents

Taiwan's cabinet approved a draft bill of a series of reforms to the country's pension systems in April. While we believe these reforms are a step in the right direction, we believe these measures are inadequate to reverse the deterioration in the country's fiscal position over the longer term.

We believe that Taiwan is likely to proceed with the operation of its fourth nuclear plant, for now. In the event that it fails to come online, however, Taiwan's economy would not just face a higher energy bill, but more importantly, the attractiveness of its business environment would also likely to be diminished, consequently presenting a considerable threat to the country's industrial-led economic model.

Major Forecast Changes

We believe the lingering presence of the government within the banking sector, an increasingly uncompetitive tech sector, an overly tech-focused economy and the reluctance to speed up Chinese investment, will impede Taiwan's structural growth prospects. Moreover, a rigid labour market, coupled with fast deteriorating demographics will serve to erode the attractive of Taiwan's business environment.

We have consequently revised our longer term growth expectations and expect real GDP growth to average 3.9% between 2014 and 2022, compared with a previous projection of 4.7%.

About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

Browse all Country Reports research reports at Fast Market Research

You may also be interested in these related reports:

- Brazil Business Forecast Report Q3 2013
- Croatia Business Forecast Report Q3 2013
- Germany Business Forecast Report Q3 2013
- Philippines Business Forecast Report Q3 2013
- Chile Business Forecast Report Q3 2013
- Kuwait Business Forecast Report Q3 2013
- United States Business Forecast Report Q3 2013
- Bulgaria Business Forecast Report Q3 2013
- Malaysia Business Forecast Report Q3 2013
- Slovakia Business Forecast Report Q3 2013