Academia Sinica yesterday upgraded its forecast for the nation’s GDP growth this year to 2.18 percent, compared with 1.68 percent it predicted in December last year, as major economic gauges proved stronger than expected amid an improving global economy.

The nation’s economy has a fair chance to grow up to 3.74 percent this year, driven in the second half by Apple Inc’s next iPhone and the government’s infrastructure program, Academia Sinica research fellow Ray Chou (周雨田) said.

“The infrastructure program is favorable for the economy, although people might differ on its details and implementation,” Chou told a news conference.

A joint review by seven legislative committees yesterday approved a special budget of NT$108.9 billion (US$3.58 billion) for this year, part of the NT$420 billion Forward-looking Infrastructure Development Program designed to bolster infrastructure at the town and village levels, as well as enhance the nation’s water engineering projects, railways and digital infrastructure.

Second and third readings of the bill are required before the government can begin to channel funds to projects.

Qualified firms have started to make preparations and compete for the funds, the Academia Sinica economics director Kamhon Kan (簡錦漢) said, adding that preparations will translate into greater private investment.

Academia Sinica expects private investment to rise 2.36 percent this year, faster than a 1.95 percent advance the Directorate-General of Budget, Accounting and Statistics (DGBAS) projected in May.

The stimulus will be seen when local firms, particular semiconductor makers, moderate their pace of capital equipment purchases after major clients adjust inventory.

Academia Sinica forecast that exports of goods and services will rise 4.23 percent this year, greater than the estimate of a 3.95 percent increase by DGBAS.

Apple’s next iPhone is expected to drive growth, as many Taiwanese firms are part of its global supply chain.

A launch delay from the third to the fourth quarter would weaken GDP in the current quarter, but would improve the performance next quarter, Kan said.

“The next iPhone’s launch being delayed until next year is unlikely, because it would then miss the celebration of the product’s 10th anniversary,” Kan added.

Chou said China’s faster-than-expected GDP growth would also lend support to the domestic economy, as China accounts for 40 percent of Taiwanese exports.

Academia Sinica forecast that the New Taiwan dollar would gain against the US dollar in the second half, trading at an average of NT$30.08 this quarter and NT$30.1 next quarter.

Expectations that US President Donald Trump’s administration would strengthen the US economy have failed to materialize, weighing on the greenback on international foreign exchange markets, Chou said.