American Express Bank Ltd yesterday forecast that Taiwan's economic growth, as measured by the growth of gross domestic product, would expand by 5 percent this year supported by exports and strong domestic investment, said Kevin Grice, a senior economist at the bank.
The American Express forecast is higher than the 4.21-percent growth predicted by the Directorate General of Budget, Accounting and Statistics on Feb. 24.
To maintain the stability of consumer prices, the nation's central bank will probably hike its benchmark interest rates, taking its cue from the US Federal Reserve, but the pace would be much slower, Grice said.
He expected Taiwan's central bank to raise the discount rate by 0.125 percentage points each quarter to raise the discount rate to 2.25 percent this year from the current 1.75 percent.
With the US Fed expected to hike the key federal-funds rate by one-quarter of a percentage point at each of three meetings in the middle of this year, the funds rate should end the year at 4 percent, according to Grice.
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