Sat, Nov 20, 2004 - Page 10 News List

Growth expected to soar to 5.93 percent

By Joyce Huang  /  STAFF REPORTER

Despite a slowdown in the second half of the year, the nation's economy is expected to grow by an estimated 5.93 percent for the full year -- the highest in seven years, the government's statistics agency said yesterday.

The Directorate General of Budget, Accounting and Statistics (DGBAS) yesterday also raised its economic growth forecast for next year to 4.56 percent from 4.49 percent.

"Exports and private investments could show better-than-expected growth of 20.9 percent and 24.9 percent respectively this year," DGBAS Director-General Hsu Jan-yau (許璋瑤) said.

Private investments peaked in the second half of this year and will continue to expand early next year, although the growth rate could slow down to 9.3 percent, Hsu said.

Amid a slowdown in the global recovery, the GDP growth rate reached 5.27 percent in the third quarter, compared with 7.29 percent in the first half of the year. Hsu said the figure may further decline to an estimated 4.11 percent in the fourth quarter.

Lehman Brothers originally predicted that third-quarter GDP may reach 4.6 percent, reflecting slower growth in exports to China and weakening global demand for electronics manufactured in Taiwan.

Like other economies in Asia, excluding Japan, the Taiwanese economy is facing the "triple whammy of US rate hikes, record high oil prices and the China slowdown," Lehman Brothers said in a report issued earlier this week.

Even so, the DGBAS said the GNP figure for this year is expected to reach a record high of NT$10.58 trillion, which amounts to US$13,995 per capita.

"Given that it will be a soft landing, we're slightly optimistic about the economic performance next year, bolstered by private investments and public expenditures," Hsu said yesterday.

DGBAS expects GNP per capita to reach US$14,961 next year, the highest figure in history.

For the first time, investments made by the government and state-owned enterprises are expected to bottom out next year to see growth of 3.1 percent and 9.4 percent, respectively -- up from this year's negative growth, he said.

The DGBAS' economic forecast is based on the assumption that crude oil prices may drop below US$35 per barrel next year.

But if oil prices rise by 10 percent, the consumer price index (CPI) could grow by 0.4 percent, while the GDP will be cut by between 0.1 percent and 0.2 percent, Hsu said.

The CPI, an inflation benchmark, is expected to rise to 1.81 percent this year and 1.88 percent next year, the DGBAS forecast.

A CPI figure below 3 percent would be acceptable, Hsu said.

Statistics committee member Yeh Wan-an (葉萬安) yesterday expressed concern over a resurgence of terrorist activity following the re-election of US President George W. Bush, which would be sure to hike up oil prices.

In addition to oil prices and interest-rate hikes, the US and Chinese economies will pose uncertainty for the local economy if they perform badly, Yeh said.

Another statistics committee member, Yu Tzong-shian (于宗先), also warned of a possible negative impact on the local economy if cross-strait relations were to deteriorate.

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