But the fundamentals are there for sustained performance throughout the year. However, a shortage of labor is beginning to worry planners. A careful eye will have to be kept on inflation, which continues to move up gradually. Interest rates may rise, but only slightly and not for long. Still, a modest improvement in exports can be expected, and energy-related and pharmaceuticals companies may prosper on the stock exchange this year.
Business confidence is high.
A sharper than expected slowdown in growth during the first half of the year is beginning to ease. Most major indicators will start to level off, particularly in such sectors as manufacturing, construction, transport and communications. Expect monetary policy to remain taut to keep inflation low. Bank loans are in a healthy condition and should stay that way. The higher yen will improve the opportunities for sales to Japan in the short term, but Taiwan's trade deficit will increase in the long run because of the reliance on specialized Japanese parts.