Taiwan's manufacturing sector is expected to post positive growth in 2010, but will not return to the level seen before the financial crisis by the end of the year, according to a report released yesterday by the Industrial Development Bureau (IDB) under the "Ministry of Economic Affairs".

In its report on the outlook for the manufacturing sector in 2010, the IDB said the sector should rebound, basing its forecast on increasing investment confidence and an improving employment picture around the world.

But the bureau warned that the global economic recovery could lose momentum after the economic stimulus programs adopted by various governments around the world are gradually phased out.

Due to the impact of the global economic downturn, the monthly index of manufacturing production suffered a steep decline after September 2008 and fell to a new low of 63.79 points in January 2009, according to the IDB.

A number of industries began to register positive growth in the fourth quarter of 2009, while others experienced slower rates of decline, with the index of manufacturing production rebounding to 115.97 in December 2009 - all indications that the manufacturing sector had recovered from the recession, the IDB said.

Although the December 2009 index surpassed the average in the first half of 2008, the IDB said that other factors, such as Taiwan's high unemployment rate and unclear export demand in the second half of the year, will make it difficult for the manufacturing sector to rebound to the level it reached prior to the financial crisis.

Despite the gradual recovery of industrial production in the United States, Japan and Europe, the end-market demand in those economies remains uncertain, leading the IDB to conclude that there is only limited room for Taiwan to expand exports to the three markets.

The IDB indicated, however, that there is ample opportunity for domestic manufacturers to expand their market share on the mainland, as orders from the mainland are expected to rise because of its strong domestic market and better than expected economic recovery.

China Daily/CNA

(HK Edition 03/11/2010 page4)