Taiwan’s GDP growth seen to turn positive in 1Q12

Thanks to industrial output that jumped 4.3% on the month-on-month seasonally-adjusted basis.

Here’s more from DBS:

January industrial production contracted in YoY terms, but mainly distorted by the Chinese New Year effects. It is worth noting that industrial output jumped 4.3% on the month-on-month seasonally-adjusted basis, after running below the long-term trend for five consecutive months ever since Aug11.

The significant improvement in January IP data together with export orders strongly supports our forecast that GDP growth (QoQ saar) will turn positive in 1Q and register a solid rate of 4%. The on-year GDP growth is also likely to bottom this quarter, at close to 1.0%. Also note that job growth has been resilient despite the economy’s technical recession occurred in 2H11.

The unemployment rate remained stable and low in Jan12, at 4.2% sa. This was aided by faster employment growth in the services industry particularly wholesale & retail trade and accommodation & food catering, which offset the slowdown in manufacturing job growth. As the unemployment rate is a lagging indicator, a pickup in the upcoming months remains possible.

But the peak in jobless rate would be significantly lower than we initially expected (4.7%). Services job growth will continue to be supported, thanks to the expansion of the individual tourist program with China (to cover 11 mainland cities from March, up from 3). The job outlook in the manufacturing sector is also beginning to improve due to export recovery.

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