Taiwan's inflation to get sluggish for the 4th time

Foreseen to slip further from 1.6%.

According to DBS, CPI inflation is projected to slow for the fourth consecutive month to reach 1.0% YoY, down from the recent 1.6% in Nov12 and the peak of 3.4% in Aug12.

Here's more from DBS:

With the seasonal factors impacting food prices largely dissipated, the downward trend in inflation numbers is gradually coming to a halt. That said, a rebound in inflation is unlikely to take place soon, given the lingering weakness in domestic demand and the appreciation of the Taiwan dollar against not only the US dollar but also the Japanese yen.

We expect the CPI numbers to stabilize at 1.0%-1.5% in the next six months, and average at 1.3% in the full year of 2013.

The external trade data will likely confirm that economic growth is recovering. Export growth is forecasted to register 4.5% YoY in Dec12, up from 0.9% in Nov12.

The volatility in customs export data is typically high, due to the distortion of seasonal and working day effects. Exports had underperformed export orders and industrial production in November.

That said, with the uptrend in export orders and industrial production becoming established, export growth should also catch up in the next few months. A recovery in investment is also likely to follow in 1H13, to be reflected in a rebound in capital goods imports.