Despite seeing lower-than-expected GDP growth in the second quarter, the government revised upward its economic forecast for the year to 3.65 percent from 3.63 percent on expected stronger growth momentum in the second half of the year.
The nation's GDP growth in the second quarter was 3.03 percent, lower than the expected 3.6 percent because of slower exports caused by the weakening global economy and industry migration, the Directorate General of Budget, Accounting and Statistics (DGBAS) said yesterday.
Following 2.54 percent economic growth in the first quarter and 3.03 in the second, the nation's GDP grew 2.78 percent in the first six months, the DGBAS said.
With factory utilization rates gradually rising among local manufactur-ers, along with major public and private investment to be implemented in the next half of the year, the statistics bureau predicts the economy will rebound to expand 4.42 percent and 4.63 percent in the third and fourth quarters, respectively. This will mean annual GDP growth of 3.65 percent, or a gross national product of NT$10.89 trillion (US$343.3 billion).
In view of the recently surge in vegetable prices resulting from post-typhoon shortages and hikes in retail gasoline prices, the consumer price index (CPI) is estimated to increase by 1.97 percent from last year, the agency said. It forecast in May that the CPI would rise 1.7 percent this year.
Even so, the growth momentum is likely to extend to next year, bolstered by steadily improving foreign trade and private consumption, which will create more jobs, the DGBAS said. The agency forecast 4.3 percent growth next year.
But economists are not as optimistic as the government, citing skyrocketing oil prices that could erode already sagging exports.
"We may cut our GDP forecast for the third time, should oil prices remain at their current high levels," said Yang Chia-yen (楊家彥), a research fellow at the Taiwan Institute of Economic Research (TIER,
Oil prices have been hovering at above US$60 per barrel over the past week, with a high of US$66 per barrel recorded last Friday. The nation's GDP growth will be cut by 0.16 percent should the average crude oil price stay above US$50 per barrel for the rest of the year, and it will further widen to 0.25 percent if the average oil price is more than US$60 per barrel, TIER said.
Chou Ji (周濟), a director at the Chung-Hua Institute of Economic Research's (CIER, 中經院) economic forecast center, said besides the soaring oil prices, the yet-to-be-passed public construction plan, and slow implementation of construction, may dampen the government's economic forecast.
The government plans to spend NT$80 billion in flood-prevention works, but the budget is still stuck in the legislature. CIER last month slashed its GDP forecast to 3.80 percent, down from its previous estimate of 4.05 percent.
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