The Chung-hua Institution for Economic Research (CIER, 中經院) yesterday cut its growth forecast for this year for the second time, due to the plummeting trade surplus in the second quarter.
Its forecast now stands at 3.53 GDP growth, down from 3.8 percent in July.
Customs statistics show that the nation's trade surplus slumped in the second quarter to US$137.3 million, down 73.34 percent year-on-year.
Driven by exporters' traditional peak season in the second half of the year, GDP growth in the third quarter is forecast to reach 4.07 percent and climb to 4.4 percent in the fourth quarter, Chou Ji (周濟), a director at CIER's Economic Forecast Center, said at a press conference.
As for whether bird flu could further weaken the nation's economy like the SARS outbreak did in 2003, Chou said it's too soon to judge, but that if the flu spreads further it could begin to weigh on exports.
CIER forecast that growth will hit 4.02 percent next year, Chou said, due to several public construction projects, an expected recovery in domestic consumption and investment and higher trade volume.
But industry insiders are not as optimistic as the research institution, due to weakening global demand.
"I think the trade surplus will keep narrowing next year, and that will have a long-term effect," said Daniel Chen (
Chen said the nation's shrinking trade surplus will be worsened by an expected slide next year in major economies such as China and the US that Taiwan's export sector depends on heavily, in the wake of high oil prices.
Another reason that exports have sharply declined is industrial migration, Chen said.
Although China and Hong Kong are Taiwan's largest export destinations, such exports will gradually slide as supply chains in China mature and Taiwanese companies begin to source more from cheaper local suppliers, he said.
The domestic sector, especially consumer consumption, will not do well next year either, Chen said.
"I don't think we should have high hopes for next year," Chen said.
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