Chung-Hua cuts GDP forecast

The Chung-Hua Institution for Economic Research (中經院) has revised its projection of Taiwan's GDP growth for 2001 down to 2.22 percent from its forecast of 4.57 percent made in April, the institute said in a statement yesterday. The downward revision was due to a slower-than-expected economic recovery and poor GDP growth in the first quarter.

The institute said the domestic and global economies have continued to slow down in the second quarter. Meanwhile, the performance of exports, imports, private investment, the jobless rate and overdue loans have also deteriorated. In addition, various factors also made the forex and stock markets volatile.

Chung-Hua sees GDP growth for the four quarters of this year to be at 1.06 percent, 1.59 percent, 1.72 percent and 4.42 percent, respectively.

Private consumption is seen rising 2.18 percent, while private investment growth is seen falling 6.79 percent. Private investment is likely to post a double-digit fall at the start of the second quarter, but may revert into positive territory by the fourth quarter.

The institute said that external trade will continue to shrink due to weak domestic and foreign demand. Exports of goods and services is expected to fall 7.08 percent in 2001, the largest fall since 1962. The fall will be the sharpest in the second quarter though a mild recovery is likely in the fourth quarter.

Chung-Hua expects consumer prices to grow 0.62 percent, while the M1B is seen falling by 1.92 percent due to the sluggish economy and weakness in financial markets.

Meanwhile, the New Taiwan dollar is expected to post an average level of 34.01 this year, but may rise above 35 in the second half of this year.