Subdued Recovery Still On Track
Our outlook for Taiwan's economy has not changed substantially since our last quarterly report. Then, on the back of slightly stronger fourth-quarter 2013 data, we edged up our growth forecast for 2014 from 3.0% to 3.1%. Now, on the back of slightly weaker first-quarter 2014 data, we are dropping back again to a 3.0% forecast for the year as a whole. Essentially, we believe private consumption and exports are easing back a little while investors remain frustrated by difficulties in securing land and labour, which have led to the stalling of a number of projects. The recovery in the US and Europe remains a clear positive for the outward-looking island economy, but this is somewhat offset by the slowdown in its main trade partner, mainland China. We expect GDP growth to accelerate to 4.1% in 2015. Trend growth over the medium term to 2018 will be 3.9% per annum.
Although subdued, the recovery in GDP in 2014 will help to pull activity levels in the country's main ports back into positive territory. This is in contrast to 2013, when we estimate that tonnage throughput in some ports (such as Taichung and Kaohsiung) actually contracted. Growth in 2014 will, however, remain very low in percentage terms. Broadly speaking, Kaohsiung - Taiwan's largest port - remains the most resilient, not least because it is attracting new investment. On the plus side, the policy of cross-straits integration is expected to continue as Taiwan's ports and shipping lines position themselves to work through a series of alliances and partnerships with mainland companies over the next few years.
Headline Industry Data
2014 Port of Kaohsiung tonnage throughput forecast to increase by 1.3% to 117.188mn tonnes, after an estimated 4.2% contraction in 2013. Over the medium term to 2018 we project an annual average increase of 1.5%.
Port of Kaohsiung container throughput forecast to grow 2.7% to 10.206mn TEUs in 2014, up from 1.6% growth in 2013; over the medium term...