The Taiwan Institute of Economic Research (TIER, 台經院) yesterday lowered its prediction of Taiwan's economic growth this year to 4.41 percent, slightly down from the 4.62 percent forecast it made in January.
In a report, TIER said the major reason for its downgrade is flattening export growth due to lagging expansion in the global economy, which has been dragged down by high oil prices and rising interest rates.
TIER's figure is the highest among several forecasts. The Chung-Hua Institution for Economic Research (CIER, 中經院) earlier revised its GDP forecast for the year to 4.05 percent, the same prediction made by the Academia Sinica. The government's Directorate General of Budget, Accounting and Statistics reduced its forecast from 4.56 percent to 4.21 percent.
"The 4.41 percent growth, although far lower than the 5.71 percent last year, is still at a normal and stable level considering Taiwan's industrial development," David Hong (洪德生), the research institute's acting president, said at a press conference yesterday.
The economy is expected to gain momentum in the second quarter and peak in the final quarter, Hong said.
According to TIER data, the economy is expected to grow 4.19 percent this quarter, 4.63 percent in the third quarter and 4.71 percent in the fourth.
Export growth is estimated to be only 9.09 percent compared to 28.2 percent last year, and imports are expected to grow by only 5.29 percent, down from 31.94 percent last year, the report said.
Private investment growth is also expected to slow down to 8.09 percent this year, with private consumption growing by 2.87 percent, according to the report.
With the Chinese government under pressure to revalue the yuan, which has caused speculative hot money to flow into Asia, TIER predicts the New Taiwan dollar will appreciate more than previously expected, to an average of NT$30.73 against the US dollar. TIER's previous forecast was an average of NT$31.65 to the US dollar.
The sinking GDP forecasts have affected manufacturers' outlook for the next half year. According a survey conducted by TIER last month, only 18.9 percent of manufacturers had a positive view of the economy, down from 51 percent in the previous poll, and 15.6 percent said they were pessimistic, up from 11.6 percent.
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