The Industrial Economics and Knowledge Center (IEK) under the government-sponsored Industrial Technology Research Institute has raised its forecast of output growth for Taiwan's manufacturing sector due to a growing global economy.
The IEK said that local machinery firms as a whole are expected to climb out of the doldrums seen in 2016 and return to a growth pattern this year.
According to the IEK, the production value of Taiwan's manufacturing sector for 2017 is expected to grow 3.87 percent from a year earlier, up 0.67 percentage points from the research group's earlier estimate. The IEK said that it remains upbeat about the economic fundamentals of the United States, the eurozone, Japan, China and the Association of Southeast Asian Nations (ASEAN), the major buyers of Taiwan's products. It added that Taiwan's exports-oriented manufacturing sector will benefit from this positive trend.
In addition, the IEK cited a forecast made by U.S. energy authorities as saying that the average price of international crude oil prices are expected to stand at US$50.8 per barrel in 2017, up from US$44.1 per barrel seen in 2016, which is expected to give an additional boost to Taiwan's industrial production and exports.
In terms of specific industries, the IEK estimated that the production value of Taiwan's metal/electromechanical industry is expected to grow 2.5 percent from a year earlier in 2017, an upgrade of 1.98 percentage points from an earlier forecast, due to a recent strong showing of the industry's exports.
The output of the information/electronics industry and the chemical industry is expected to grow 4.0 percent and 6.31 percent, respectively, from a year earlier in 2017, while the production value of the sector producing daily necessity items such as textile is expected to rise 1.78 percent.
The forecast upgrade by the IEK echoed several economic think tanks' moves to raise their predictions of Taiwan's gross domestic product (GDP) growth for 2017.
Among the upbeat think tanks, Academia Sinica, Taiwan's top academic research institution, has raised its forecast of Taiwan's 2017 GDP growth from 1.68 percent to 2.18 percent, the highest growth estimate so far.
The Taiwan government has also upgraded its own GDP growth forecast for 2017 to 2.05 percent, up from an earlier prediction of 1.92 percent.
As for the machinery business, the IEK said that the output growth for 2017 is expected to range between 4.8 percent and 5.8 percent, a big improvement compared with a 12.6 percent year-on-year decline seen in 2016.
The IEK said that such an upbeat mood largely reflected a recovery in demand from China, while accelerating manufacturing activity in the United States and Europe has also helped Taiwan's machinery firms.