Thu, Jul 22, 2004 - Page 10 News List

Academia Sinica raises GDP forecast

REVISED UPWARD Even though it thought there may be a slight slowdown in the second half, the institute remained optimistic about exports and private investment

By Joyce Huang  /  STAFF REPORTER

Academia Sinica yesterday revised upwards its economic growth, or GDP, forecast for this year to 5.76 percent from the 4.35 percent predicted in December as a result of healthy economic momentum.

Full-year exports may see a 13.94 percent growth while imports may more than double to hit 15.9 percent from last year's 6.18 percent, the research institute reported at a press conference.

"While an economic slowdown in the second half year and next year is foreseeable, the nation's full-year growth momentum remains pretty healthy in the middle and long term," said Wu Chung-shu (吳中書), a research fellow at the Institute of Economics at Academia Sinica.

Wu attributed the short-term economic slowdown to the consequences of "contradictory monetary policies adopted by several countries to ease burgeoning inflationary pressures." That's why many countries are maintaining a moderate policy of raising interest rates, he said, adding "such a cooling policy is necessary and healthy."

Despite an economic slowdown in the second half of the year, Wu estimated that the second quarter's GDP would shoot up to 6.65 percent, up from 6.29 percent in the first quarter.

"Taiwan has no problem maintaining an economic growth rate of between 4 percent and 5 percent, bolstered by the nation's economic fundamentals and rosy export performance in light of a global recovery and a pickup of demand," he added.

Wu praised the growth in private investment since the end of last year, attributing it to restored economic confidence and saying 23 percent growth may be foreseeable this year.

After signs that the recovery of the property sector has solidified, the consumer price index (CPI) may rebound from last year's 0.28 percent contraction to an estimated 1.23 percent this year, he said, which he said was healthy and supported by domestic demand.

Wu, however, refused to reveal the institute's GDP forecast for next year, only saying that it would fall somewhere between 4 percent and 5 percent.

Academia Sinica's GDP forecast is similar to one released by the Chung-Hua Institution for Economic Research (CIER, 中經院) last week.

CIER also revised its forecast upward to 5.35 percent from the 4.67 percent it predicted in April.

At yesterday's presentation, Academia Sinica President Lee Yuan-tseh (李遠哲) expressed concerns that the nation's flat-panel makers may have over-invested, leading to an oversupply in the near future.

But Wu was optimistic, saying that the flat-panel makers are highly competitive internationally and will stay viable as long as there is demand, even though stiff price competition might reduce their profits.

"Most Taiwanese enterprises are capable of adjusting their operations to the market's ups-and-downs," he said. "But the concerns are rising oil prices, the aftermath of China's cooling measures to rein in its overheated economy and the possible hike in interest rates."

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