Fri, Oct 17, 2003 - Page 10 News List

CIER revises GDP growth upwards

GLOBAL RECOVERY Although SARS hit the economy worse than expected earlier this year, the second-half of the year is seeing better-than-expected performance

By Joyce Huang  /  STAFF REPORTER

The Chung-hua Institution for Economic Research (CIER, 中經院) yesterday revised upward its economic growth forecast for this year to 3.08 percent from the 3.02 percent predicted in July.

"The post-SARS economic performance in the second half of this year is better than expected, although the fatal epidemic in the second quarter had a worse-than-expected impact on the economy," Chou Ji (周濟), director of CIER's Center for Economic Forecasting, told a press conference.

The think tank projected next year's economic growth would hit 4.01 percent. But if private investment and exports both pick up to increase by NT$60 billion, the figure may go as high as an estimated 4.8 percent.

But if SARS appears again later this year, next year's GDP may be undercut by 0.79 of a percentage point to an estimated 3.04 percent, Chou said.

The nation's jobless rate is expected to go down in the fourth quarter to level out at an estimated 5.04 percent, while breaking the 5 percent threshold to hit 4.99 percent next year, Chou said.

Since pressures on Asian currencies to strengthen still linger on, the New Taiwan dollar will continue to gain against its US counterpart, he added.

CIER estimated that the local currency may average at NT$33.78 against the greenback in the fourth quarter, up from the third quarter's NT$34.35, while further strengthening to NT$33.61 next year.

Taiwan will continue to benefit from the growing China market which consumes about one-third of the nation's exports each year, Chou said.

In response to the institution's economic forecast, pundits expressed greater optimism in the upcoming economic recovery in a later seminar.

Wu Chung-shu (吳中書), a research fellow of the Institute of Economics at Academia Sinica, said that his think tank will soon release a rosier 2004 GDP forecast than the CIER's 4.1 percent.

He said that signs showed that private investments are slowly upturning as the global economy recovers.

Wu's view was shared by Lee Kao-chao (李高朝), an advisor to the Council for Economic Planning and Development. Lee said many private investors have recently competed for the supply of land at the Chung Shan Institute of Science and Technology (中科院) in northern Taiwan.

In the same seminar, Hsieh Chin-ho (謝金河), president of the Chinese-language business magazine Win-Win Weekly, said that signs have shown that foreign investors are very confident in Asian economies and thus have injected much "hot money" into the region.

"Asian stock markets are sure to outperform other markets in the world," Hsieh said.

But Hsieh yesterday expressed concern about possible inflation in China, which is determined not to float its currency.

Following China's resistance to unpeg the yuan from the US dollar, central banks in Asian countries also adopt various monetary policies to maintain currency stability including buying US dollars, which helped increase the region's foreign reserve.

According to Hsieh, the total foreign reserve in Asia reached US$1.6 trillion, or 72 percent of the world's foreign reserve, up from the 30 percent in 1990.

As a result, the price of raw material in China is on the rise to dismiss previous worries of deflationary pressures while fueling worries of possible inflation, he said.

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