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Think tank sees rosy future for nation's economy

Boosted by the global economic recovery and rising consumption, the nation's economic prospects for the year are looking up despite various uncertainties at home and abroad, a private think tank said yesterday.

"We're highly confident about Taiwan's economic development in the next six months, although several negative factors are looming, such as worries about record-high oil prices, the prospect of higher US interest rates and China's plans to cool its overheating economy," said David Hong (洪德生), vice president of the Taiwan Institute of Economic Research (TIER, 台經院).

The nation's exports in April soared 22.8 percent from the previous month to reach US$14 billion, while imports showed double-digit growth rates last month, jumping 25.7 percent to US$13.1 billion for the month, the Directorate General of Budget, Accounting and Statistics reported last month.

As the jobless rate last month also reached its lowest level since June 2001, at 4.36 percent, Hong said this year's domestic consumption is expected to grow 2.97 percent, up from last year's 0.79 percent.

The bullish economic outlook includes private investments, which the TIER expects to rise 22.93 percent this year after contracting 0.7 percent last year.

However, local manufacturers were less optimistic than the research institute.

Based on polls the TIER conducted last month, 45.8 percent of respondents said the domestic economy would experience an upturn in the next six months, down from 52.6 percent in March.

Some 47 percent of the polled manufacturers maintained their economic outlook last month, compared with 42.6 percent in the previous month. But about 7.2 percent of respondents were bearish about the outlook, up from 4.8 percent in March.

"Generally speaking, over 90 percent of the manufacturers polled still said that the economy will take a turn for the better in the next half of the year," Hong said.

Contrary to media hype about the possible adverse effects of Beijing's policy to tame its overheating economy, Hong said this would instead be conducive to Taiwan's long-term development.

"It will only affect the Taiwanese businesspeople investing across the Taiwan Strait," he said.

As demand remains unchanged within the short term, China's cooling policy might lead to reduced production there and so Chinese companies might have to step up imports from Taiwan, he explained.

President Chen Shui-bian (陳水扁) called for dialogue across the Taiwan Strait to boost trade links during his inauguration speech last Thursday.

"What investors are really concerned about is whether the investment environment has improved," Hong said.
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