Tue, Jul 27, 2004 - Page 10 News List

Think tank shifts GDP estimate upward

By Jackie Lin  /  STAFF REPORTER

The Taiwan Institute of Economic Research (台經院) yesterday revised upward its GDP estimate for the year to 5.67 percent from the 5.08 percent it had predicted in April.

"The continued global economic recovery and the nation's robust exports, which have driven domestic demand and strong growth in industrial production, helped push up the forecast figure," institute president Wu Rong-i (吳榮義) said at a press conference yesterday.

GDP for the second quarter was estimated to be 7.03 percent, exceeding the first quarter's 6.28 percent. This strong momentum, however, will slow in the second half of the year due to rising oil prices, interest rate hikes and China's efforts to rein in its overheated economy, Wu said.

Taiwan's economic growth for the third and fourth quarters are predicted to be 4.98 percent and 4.55 percent respectively, he said.

These uncertainties, coupled with the worse-than-expected performance of the stock market, were reflected in a poll that the institute conducted of manufacturers last month, with some respondents turning conservative on their economic outlook for the second half of the year, Wu said.

The survey showed that 36.3 percent of respondents were bullish about the economy, down from 41.5 percent in the May poll.

"Their attitude shift can be attributed to the lack of new incentives in the near future," Wu said.

Even so, private investment is estimated to grow 20.71 percent this year, compared to last year's 0.7 percent contraction, while private consumption is expected to grow 3.16 percent, up from 0.79 percent last year, thanks to the improving employment market and signs that the property sector is solidifying, Wu said.

Wu noted that the nation has no inflation concerns for the moment, as the consumer price index is expected to hit only 1.33 percent for the year.

"Therefore, we forecast that the central bank will not follow the Fed's lead by raising interest rates when the nation's stock market has been on a downward trend lately," he said.

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