Taiwan's GDP growth to edge up to 2.7%

Finally, after bottoming out in 3Q12.

According to DBS, the advance estimate of 4Q12 GDP is due Thursday. The firm forecasts that the on-year growth has risen to 2.7% from 1.0% in the preceding quarter.

In the sequential terms, the economy would have continued to grow 2.4% QoQ saar in 4Q12, after bottoming out in 3Q12 (3.9%).

Exports should have been the major growth driver in 4Q12. This was despite that the QoQ growth momentum in exports eased slightly from 3Q12 due to the high base (exports rose strongly in Sep12 on the back of festive demand and release of new IT products).

Here's more from DBS:

On the other hand, investment and consumption appeared to remain weak in 4Q12, with the key indicators including capital goods imports and retail sales staying flattish.

We forecast 4.2% GDP growth in 2013, above the consensus of 3.3%. Export recovery will likely be sustained in the near term, as evidenced by the solid rise in export orders as of Dec12.

Along with the recovery in external demand consolidates, capital spending in the manufacturing sector is also likely to pick up.

Meanwhile, we expect consumer spending to improve this year, as inflation has started to normalize after the one-off surge in food and energy prices in 2012.

From the sectoral perspective, besides a cyclical recovery in the manufacturing sector, growth drivers in the services sector are expected to remain intact this year thanks to further deregulations in cross-strait relations.

Starting from May, the daily quota for individual Chinese tourists visiting Taiwan will be lifted to 2,000 from 1,000, and the daily limit for Chinese tourists traveling in groups will be raised to 5,000 from 4,000.

This is expected to create additional tourism revenues of TWD 36bn or 0.2% of GDP this year. Meanwhile, Taiwanese banks will start offshore RMB business soon from next month, which bodes well for the income and employment outlook in the financial services sector.