Taiwan raised its forecast for this year’s growth to 3.53 percent from 3.15 percent as China’s economic rebound boosted its imports, underscoring President Ma Ying-jeou’s case for closer trade and investment ties.
The island plans to allow more visitors and securities investment from the mainland, and let domestic lenders conduct business in yuan by early February.
Taiwan’s shipments to China, its largest trading partner, rose 12.6 percent last month from a year ago, an earlier report showed, and Taiwan Semiconductor Manufacturing Co., the world’s largest contract producer of chips, has forecast first-quarter sales surpassing estimates as demand outstrips expectations.
“China’s economy has bottomed out and it was the key driver for Taiwan’s growth in the fourth quarter, as exports recovered,” said Ma Tieying, an economist at DBS Group Holdings Ltd. in Singapore.
“The recent measures will also contribute to growth in Taiwan’s services sector this year,” said Ma, whose 2013 GDP forecast for the island is 4.2 percent.
Taiwan’s Central Bank held the discount rate on 10-day loans to banks at 1.875 percent last month after inflation eased from a four-year peak in August. The economy grew 1.25 percent in 2012, the statistics bureau said.
Exports growth may be 6.07 percent, more than a previous prediction of 5.11 percent it said, and raised its inflation forecast for this year to 1.31 percent from 1.27 percent, with pressure seen from higher minimum wages and a planned electricity tariff increase.
“Taiwan is a nice barometer for the region and indeed for the global economy, given they are such an export-manufacturing led economy,” said Levine.
The fact that the fourth-quarter number was above expectations and showed a sharp acceleration does bode well for the region.
Taiwan’s benchmark Taiex index fell 0.1 percent as of 11:39 a.m. local time. The Taiwan dollar was little changed at NT$29.574 against its US counterpart.
Elsewhere in the Asia-Pacific region, Japan’s industrial production rose less than estimated in December from the previous month. New Zealand’s Central Bank left its benchmark interest rate at a record-low 2.5 percent while signaling concern about rising house prices.
In Europe, Germany reports retail sales for December and unemployment and preliminary inflation for January. France may say consumer spending rose 0.2 percent in December from a month earlier, unchanged from November’s pace, based on a Bloomberg survey of analysts.
US Economy Shrinks
US consumer spending probably rose at a slower pace in December than in November, according to a Bloomberg survey ahead of a report.
And in January for the third consecutive month, the consumer confidence dropped from 66.7 in December to 58.6, the Conference Board said, UPI reported.
The US economy unexpectedly shrank at an annualized rate of 0.1 percent in the fourth quarter of 2012, initial official estimates indicate.
If confirmed, it would be the first contraction logged by the US economy since the 2009 global recession, BBC wrote.
The world’s largest economy grew 3.1 percent in July to September.
The fourth quarter period was dominated by the fiscal cliff--the spending cuts and tax rises that had been due to come into force from 1 January.
These were avoided by a last-minute deal between the Republican-dominated Congress and the White House. However, economists warned at the time that fears of an abrupt cut in government spending were undermining business and consumer confidence.
More Good News
In Singapore, the seasonally adjusted jobless rate fell to 1.8 percent last quarter from 1.9 percent in the previous three- month period as companies hired more local workers after the government tightened the inflow of foreign labor.
Philippine President Benigno Aquino’s efforts in transforming the nation into one of the region’s fastest-growing economies have led to Google Inc. opening an office this month and Ayala Land Inc. unveiling plans to build more hotels.
Standard & Poor’s last month raised the country’s sovereign rating outlook to positive, citing improved governance and public finances, and taking it closer to an investment grade.
The Philippine peso has risen about 6 percent in the past 12 months, the best performer among 25 emerging-market currencies tracked by Bloomberg. The Philippine Stock Exchange Index climbed to a record this month.
Central bank Governor Amando Tetangco said he’s studying more measures to counter excessive capital inflows lured by growth, joining South Korea and Singapore in warning that policymakers need to consider more steps to reduce the impact of such funds.
The nation’s fiscal situation is well under control, with the budget deficit within target, Finance Secretary Cesar Purisima said after the data release.
Bangko Sentral ng Pilipinas last week refrained from cutting its benchmark rate after four cuts in 2012 and as capital inflows boost the peso.
The monetary authority targets inflation to average 3 percent to 5 percent until 2014. Export growth eased to 5.5 percent in November from a 6.1-percent pace the previous month as an uneven global recovery sapped demand.
The Philippines is forecast to be among the 10 fastest-growing economies in 2013 and 2014, according to a Bloomberg survey.
Indonesia will report GDP data on Feb. 5, with the central bank estimating last month growth was 6.2 percent in the fourth quarter, matching the pace of the previous three months.
Spanish Economy Plunges
Spain’s economy shrank at the fastest pace in more than three years in the final quarter of 2012, official data showed, casting a shadow over the prospects of nearly six million unemployed.
Total economic output slumped 0.7 percent from the previous quarter, the steepest decline since the second quarter of 2009, after a 0.3-percent dip the previous quarter, AFP reported.
The preliminary report by the National Statistics Institute showed the recession, which started in the final months of 2011, still tightening its grip on the eurozone’s fourth-largest economy.
Just days earlier, a separate report showed Spain’s unemployment rate shot to 26.02 percent in the fourth quarter--the highest level since the re-birth of Spanish democracy after death of General Francisco Franco in 1975--as 5.97 million people sought in vain for work.
Raj Badiani, economist at London-based research house IHS Global Insight, predicted another 0.5-percent decline in gross domestic product in the first quarter of 2013 as households snap their purses shut.
The outlook for the remainder of 2013 and 2014 is no better, he said in a report.
The main impediments to any recovery prospects remain the fallout of the ongoing financial crisis hanging over Spain, coupled with still-punishing employment losses lifting the unemployment rate to 26 percent at the end of 2012, the continued fiscal squeeze, disrupted credit flows and still acute house-price falls, Badiani said.
This casts a considerable shadow over the household economy, suggesting consumer spending, which now accounts for 56 percent of GDP, will struggle to provide any positive impetus to economic activity in the next two years.
Latest figures also showed that gross domestic product for the whole of 2012 declined by 1.37 percent, slightly better than the 1.5-percent contraction predicted by the government.
Amongst all the bad news, this figure is a bit better than expected, said Gayle Allard, economist at IE Business School.
“I have hope that this was the worst quarter. From here on we will improve. Businesses are doing what they have to do: Seeking an exit through foreign markets,” Allard added.
If the government pursues its promised reforms that will also help. In training, in collective bargaining, in unemployment benefits and the duplication of work in the public sector... there is a lot that can be done.
Economy Minister Luis de Guindos said in Davos, Switzerland that he expected the economy to return to growth in the second half of 2013.
But activity is being curbed by his government’s program of spending cuts and tax rises, aimed at saving €150 billion ($ 194 billion) between 2012 and 2014, prompting mass street protests.
The government has vowed to lower the public deficit from the equivalent of 9.4 percent of annual gross domestic product in 2011 to 6.3 percent in 2012, 4.5 percent in 2013 and 2.8 percent in 2014.
More Canadian Youth Unemployed
The rise in youth unemployment in Canada during the recent recession will cost Canadian youth $23.1 billion in lost wages over the next 18 years, according to a new report by TD Economics.
The unemployment rate for Canadians of ages 15-24 was 11 percent in July 2008, peaking at 16.4 percent in July of 2009.
In the past three years, it has yet to fully recover, still sitting at 14.1 percent in December of 2012, Financial Post wrote.
This stubbornly high unemployment rate will have a big impact on both young Canadians’ current wages, as well as their wages in the future.
High unemployment has meant lost wages due to fewer young people working, which the report said has taken $10.7 billion out of young Canadians’ paycheques.
On Thursday, CBC Doc Zone presents Generation Jobless, a documentary that delves into the reasons why so many young Canadians are overeducated and underemployed.
According to the report’s author, senior economist Martin Schwerdtfeger, another significant impact is what’s known as “wage scarring”.
“Being unemployed at a young age can have a long-lasting impact on an individual’s career prospects,” Schwerdtfeger writes.
Oil Exports Rise to Highest Since EU Sanctions
Iran’s crude oil exports in December leapt to their highest level since European Union sanctions took effect last July, analysts and shipping sources said, as strong Chinese demand and tanker fleet expansion helped the OPEC member dodge sanctions.
Exports rose to around 1.4 million barrels per day (bpd) in December, according to two industry sources and shipping and customs data compiled by Reuters on a country-by-country basis and corroborated by other sources and consultants.
Western sanctions aimed at curbing Iran’s disputed nuclear program halved Iran’s oil exports in 2012 from 2.2 million bpd in late 2011.
But continuous robust demand from top buyer China and others such as India and Japan, as well as the purchase of new tankers, allowed the Islamic Republic to unexpectedly boost exports late last year.
Salar Moradi, oil market analyst at oil and gas consultancy FGE, estimated that Iran shipped more than 1.4 million bpd of crude oil in December and forecast that exports would remain between 1.1-1.3 million bpd in the first quarter of 2013.
This represents an increase from a low-point of less than 900,000 bpd in September and suggests monthly revenues worth approximately $4.7 billion based on December Brent prices.
They (Iran) bought a number of tankers from China and can now do more deliveries.
“It’s taken some pressure off Iran and facilitated tanker traffic and we are seeing higher exports to China,” Moradi said.
The second industry source said the rise in exports to nearly 1.4 million bpd was a result of traditional buyers finding new ways to secure shipping insurance.
Iran-Iraq-Syria Gas Line By Next Summer
The gas pipeline to take Iran’s rich gas reserves to Iraq and Syria will be completed by next summer, an Iranian official announced.
Iranian Oil Ministry Spokesman Alireza Nikzad Rahbar said the country will start exporting natural gas to Baghdad by next summer via an under-construction pipeline between the two countries, FNA reported.
He said that the “Friendship Pipeline” project between Iran, Iraq and Syria is the most important project currently pursued by the ministry.
The official said, “If the project is carried out according to schedule, the gas pipeline between Iran and Iraq will be completed next summer,” adding that tripartite talks are underway to extend the pipeline to Syria.
He noted that the pipeline would be designed in a way that it can deliver gas to other Muslim countries like Jordan and Lebanon in future.
The oil ministers of Iraq, Iran and Syria had signed a preliminary agreement for a $10 billion natural-gas pipeline deal on July 25, 2011, in Assalouyeh in the southern province of Bushehr.
Iranian oil officials then said Syria will purchase between 20 and 25 million cubic meters a day of Iranian gas while Iraq has also already signed a deal with Tehran to purchase up to 25 million cubic meters a day to feed its power stations.
The main project, 1,500 km length of piping Assalouyeh gas to Damascus, requires an investment of $10 billion.
The pipeline will transfer 110 million cubic meters of natural gas daily to Damascus.
The gas will be produced from the Iranian South Pars gas field in the Persian Gulf, which Iran shares with Qatar, and holds an estimated reserve of 16 trillion cubic meters of recoverable gas.
Iranian officials have said that Tehran also aims to extend the pipeline to Lebanon and the Mediterranean to supply gas to Europe.
Ukraine’s economy plunged into recession in the final quarter of 2012 with GDP contracting 2.7 percent, the second quarter running of negative growth.