Taiwan is expected to post real GDP growth of 3.9 percent this year, ranking at the bottom among Asia's "Four Little Dragons," according to a report released this week by the Pacific Economic Cooperation Council (PECC) in Hong Kong.
The council was established in 1980 as a non-governmental advisory group and has become a key policy adviser to APEC.
The council predicted that Singapore's real rate of GDP growth would be 7.1 percent this year, followed by Hong Kong with 6.3 percent and South Korea with 5 percent.
If the predictions are borne out, South Korea will post a higher GDP than Taiwan for the first time in three years.
Commenting on that prediction, David Hong, president of the Taiwan Institute of Economic Re-search (TIER, 台經院), said yesterday that Taiwan's economic structure is different from South Korea's, and the country should focus on finding its "niche market."
South Korea's economy centers on conglomerates, heavy industries and the high-tech and automobile sectors, he said, while Taiwan has balanced development in every industry. For this reason, South Korea is often subject to changes in economic cycles, while Taiwan has experienced steadier economic development, he said.
The PECC forecast was slightly lower than those that have been made by government and local research institutions.
The Directorate General of Budget, Accounting and Statistics has predicted that GDP growth will hit 4.28 percent this year. The Chung-hua Institution for Economic Research's (中經院) study gave a 4.11 percent growth rate, while TIER said it would be 4.01 percent.
The council also projected that Taiwan's exports will increase 9 percent this year, compared with South Korea's 10 percent, Singapore's 8.7 percent and Hong Kong's 8.1 percent.
Taiwan's exports grew 13.8 percent for the first 10 months of the year from last year, according to government statistics.
On the outlook for next year, the Asia region's economic growth is expected to decline from 4.95 percent for this year to 4.29 percent for next year, the report said.
While Singapore, Hong Kong and South Korea are expected to post lower economic growth next year, Taiwan's economic growth is expected to rise to 4.3 percent, PECC said.
The group also predicted that the exchange rate between the New Taiwan dollar and the greenback will rise from NT$32.48 to one this year to NT$31.89 next year.
Meanwhile, a survey conducted by the council of 370 business leaders, academics and senior officials in the region found that 35 percent thought that cross-strait relations pose a"moderately serious" short-term risk to Taiwan's economic outlook.
While 12 percent of the respondents thought the risk was "serious," 3 percent thought it was "very serious."
The survey also included questions on the effectiveness of regional organizations and the challenges facing them. The results for ASEAN and APEC were similar, with ASEAN rated slightly higher than APEC on trade liberalization and political and security dialogue, but less well on economic cooperation and in meeting the needs of the business community, the council's report said.
Only 42 percent of respondents agreed that "APEC is as important today as it was in 1989."