Successful government reforms and increased domestic investments could drive up the nation's economic growth to 4.51 percent for next year from the current forecast of 4.02 percent, according to the Chung Hua Institution for Economic Research (CIER,
If reforms and investments do not materialize or if the nation fails to sign regional free-trade agreements (FTA), economic growth will drop to 3.65 percent, the institution said. The economic growth rate for this year was estimated at 3.53 percent.
The director of CIER's Center for Economic Forecasting, Chou Chi (周濟), said there are several factors making up the calculation, each of which is capable of affecting development in the coming year. They include high gasoline prices, the December elections, cross-strait exchanges and the most influential -- a possible outbreak of an avian flu pandemic.
Chou said that his center has built in two different scenarios in forecasting the nation's economic activity for next year. The first assumes that "government reforms are implemented well, domestic investment grows, global economic growth rises and technology industrial giants act to expand their operational lines on the island."
Under this scenario, domestic investment will record growth of NT$10 billion (US$297.6 million) each quarter, beginning from the first quarter, with similar growth registered in exports.
Chou said based on these calculations, growth in consumption next year is expected to increase to 3.04 percent from an original forecast of 2.81 percent, with domestic investments expanding to 8.74 percent from 6.54 percent.
The second scenario assumes that Taiwan fails to enter regional FTAs, , Chou said. Under this situation, exports would drop by NT$10 billion per quarter, with a similar decline in domestic investment.
Consumption would drop from 2.81 percent to 2.63 percent, while the domestic investment growth would be expected to fall to 6.31 percent from 6.54 percent, he said.
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