The Taiwan Institute of Economic Research (TIER, 台經院) yesterday slightly revised downward its estimates of this year's economic growth rate by 0.02 percent to 3.51 percent, but remained bullish about an upcoming economic recovery.
"Following the global economic revival, the local economy is also quickly recovering now that economic uncertainties have completely cleared in the second half of the year," TIER president Wu Rong-i (
With the nation's export strength continuing to gain steam following a gradually recovering global economy, Taiwan's GDP is expected to grow 4.62 percent next year, TIER projected.
Wu said the 4.62-percent growth is a relatively conservative estimate and it shouldn't be too difficult to achieve.
"Given the nation's economic fundamentals, Taiwan should have the potential to achieve an annual GDP of above 5 percent," he said.
In addition to strong export performance, local private investment is expected to reach a 6.94 percent growth rate next year since the government has allocated NT$500 billion over five years for public works, Wu said.
Bad news lies in the nation's unemployment rate and consumer price index (CPI), both of which showed little sign of improving, Wu continued.
"Like the US, Taiwan is also experiencing a `jobless recovery' since new businesses recruit fewer employees than they used to," Wu added.
Wu said the deflation problem was hard to tackle, as the consumer price index was still on the decline.
On Wednesday, the Directorate General of Budget, Accounting and Statistics said the CPI fell 0.07 percent last month, the fifth successive month of decline.
Global overcapacity, beginning two years ago, fueled the world's emerging worries of global deflation, while China's current overcapacity further depressed the price of commodities on the market, Wu said.
Despite China being blamed for exporting deflation to other Asian countries, Kung Ming-hsin (龔明鑫), a division director at TIER, said people should not overlook China's economic importance in the Asia-Pacific region.
With a population of 1.3 billion people, the to-be-opened domestic-market in China will be comparable to two great world markets in the US and Europe, Kung said.
China, however, is not sincere about opening up its markets, since it uses them as a bargaining chip to leverage its political and diplomatic importance in the international community, Kung said.
Therefore, even though China might have temporarily triumphed in the battle to unpeg its yuan against the US greenback, the yuan's appreciation will remain an issue that needs to be dealt with eventually, he added.
On the other hand, China's resistance to floating the yuan excuses other Asian countries from letting their undervalued currencies to appreciate. The result is an increase in foreign reserves in Asia, which may trigger a regional financial crisis if trade surpluses are not offset either by appreciating Asian currencies or other measures, Kung warned.
While the competition in developing high-tech industries stiffens among Southeast Asian countries, Kung said he is confident that Taiwan, as well as South Korea, will have the upperhand in gaining technological advantages.
When asked if the nation's upturning economic fundamentals will help bolster the stock market, Wu replied that "I don't see any reason that the benchmark won't hit the 7,000-point level."
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