Taiwan's external demand to improve in H2

It is reported that orders for new smart phone models increased around 20% from a year ago while Taiwan domestic semiconductor producers are gaining market share in the global market, which should support Taiwan's exports in H2.

"The weakness in Taiwan net exports is unlikely to last. The rebound in US economy is expected to lead export recovery in H2", says Societe Generale. 

Moreover, the government has announced a package of measures to boost exports and investments, with a timeframe of three years. One of the measures is to grant net TWD240bn ($8bn) loans to the small- and medium-size enterprises, which is equivalent to additional three percentage points in lending growth in H2. 

"Domestic demand is likely to remain resilient. Private consumption growth, albeit less likely to strengthen further given cooling consumer confidence, is expected to stay reasonably strong. Investment growth will be supported by a better export outlook", added Societe Generale.

This is a timely measure against the backdrop of slower credit growth. Plus, a quota of TWD500bn loans is also being provided to large enterprises, which is likely to help improve investments appetite.