Domestic consumption is expected to remain weak next year as consumers continue to feel uncertain about the future, MasterCard Worldwide said yesterday.
The banking and retail sectors have been hard hit this year by the consumer loans crisis, with a growing number of shoppers taking a conservative attitude to spending, it said.
Yuwa Hedrick-Wong (
According to his forecasts, China and the US -- Taiwan's two most important trade partners -- are expected to see their economic growth slow down next year to under 8 percent and below 2 percent, respectively.
With the two major economies reporting a less-than-promising outlook, Taiwan's GDP is expected to expand by just 1.2 percent next year, he added.
MasterCard's forecast is low compared with estimates from other research institutes.
The Council for Economic Planning and Development (CEPD) announced on Monday an economic growth target of 4.6 percent for next year, while Goldman Sachs put the figure at 4.5 percent for Taiwan during the same period of time, above the market consensus figure of 4 percent.
Despite the alarming prediction, Hedrick-Wong said that Taiwan was expected to transform from a middle-income nation to a high-income country within two decades, boosted by the shift from dependence on manufacturing to focus on high value-added, high-paid and skill-intensive domestic services.
Manufacturing's share of Taiwan's total industrial output has dropped from 30.2 percent in 1995 to 25.4 percent last year, while high-end services have grown from 16.5 percent out of total industrial output in 1995 to 21.4 percent last year, he said.
The economist urged Taiwanese businesses to go global but noted "the challenge is how that would benefit our domestic economy."
He said the major obstacle now facing the nation was that it lacked a successful economy to both support and lure investment from the many prosperous local businesses.
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