Think tank sees higher growth

The Chung-hua Institution for Economic Research (CIER, 中經院) yesterday gave a cautiously optimistic forecast for GDP, predicting 4.26 percent growth next year.

The government-funded think tank also slightly revised upward its economic forecast for this year to 3.12 percent from the 3.08 percent predicted in October.

"Driven by rising export growth, the local economy, which is closely linked to an upturning global economy, is expected to perform better and better next year," said Chou Ji (周濟), director of CIER's Center for Economic Forecasting, at a seminar focusing on the economic outlook around the world.

Chou said that local private consumption is expected to stabilize and level out at an annual growth rate of 3.06 percent next year, from this year's estimated 0.96 percent. The nation's fixed-assets investments may rebound to a record high growth rate of 6.39 percent next year.

The nation's private investment growth, which is estimated to contract by 1.32 percent this year, may also recover and grow by 8.23 percent next year, Chou added.

If private investment and exports both increase by NT$60 billion, GDP growth may reach as high as 5.06 percent, Chou said. However, if the presidential election next March raises cross-strait tensions and delays public works plans, reducing exports and investment by NT$60 billion, growth may fall to 3.89 percent, he added.

The economist expressed concern over appreciation pressures on the New Taiwan dollar against its US counterpart and the nation's unemployment.

The NT dollar may further strengthen to NT$33.8 against the greenback from this year's estimated NT$34.41. The unemployment rate may continue to hover around 5 percent because of the nation's industrial transformation, Chou said.

One of President Chen Shui-bian's (陳水扁) campaign promises had been to push the nation's GDP growth to more than 5 percent.

In response, Hung Jui-bin (洪瑞彬), an official from the Cabinet's Council for Economic Planning and Development, said that the government has allocated NT$1.987 trillion to fund the 10 construction projects proposed by the Cabinet.

"If implemented thoroughly, the construction project package is expected to contribute 1 percentage point to GDP, which will bring up the nation's GDP figure to above 5 percent," Hung told the same seminar, adding that the government has also started programs to lower the jobless rate to below 4.5 percent.

"In addition to exports, domestic demand should be further boosted to bolster next year's economic growth," he added.

Daniel Chen (陳文郎), president of SinoPac Asset Management International Corp (建華管理), yesterday said that the upcoming global economic recovery has solidified and Taiwan is expected to benefit from the end of a slump in the high-tech sector over the past three years.

Chen, moreover, said that there may be a window of opportunity for the nation's saving interest rates to climb in the middle or end of next year, adding that the local economy will continue to depend on China's economic performance and policies.