Fri, Dec 22, 2006 - Page 12 News List

Taiwan export rate expected to decline slightly next year


Taiwan's export sector is expected to decline slightly next year in pace with the slowing world economy, making domestic demand the key pillar for sustaining the nation's economy, the Polaris Research Institute (寶華經濟研究院) said yesterday.

Taiwan's GDP growth this year is expected to reach 4.38 percent, close to the government's prediction of 4.39 percent, the research institute said.

With a softening economic outlook for the world's economy, especially in the US, the GDP figure will slide to 4.2 percent next year, Liang Kuo-yuan (梁國源), president of the research institute, said at a press briefing.

The export sector, which will grow by 10.24 percent this year, is estimated to grow at 6.63 percent next year, he said.

Export orders rose 10.62 percent from a year earlier to US$27.22 billion last month, the second-highest figure in recent years, the Ministry of Economic Affairs reported yesterday. In the first 11 months of this year, export orders totaled US$272.92 billion, up 17.74 percent from the same period a year ago, it said.

As for domestic demand -- including both domestic investment and consumption -- Liang said it was expected to climb from growth of 1.11 percent this year to 2.67 percent next year.

But government and private investment this year recoiled on industry migration with few major public construction projects in progress, and private companies were battered by the credit abuse storm, he said.

As bad consumer loans ease, along with the recent bullish stock market and a real estate market that gives consumers more dispensable income, private consumption will jump considerably and contribute 1.53 percent of GDP growth next year, up from 0.84 percent this year, the research institute said.

With the absence of typhoons and easing oil prices, the consumer price index (CPI) will grow by 0.59 percent this year, and rise to an average 1.7 percent next year, Polaris predicted.

Local exporters may need to be cautious of the appreciation of the New Taiwan dollar, given the weakening US dollar, and the country's widening trade deficits, Liang said. The NT dollar yesterday gained NT$0.064 to close at NT$32.553 against its US counterpart on the Taipei Forex Inc.

The NT dollar is expected to rise further, Liang said, citing central bank

statistics which showed that the three-month non-deliverable forward (NDF)

rate of NT dollars is NT$32.42 per US dollar, with the six-month NDF rate at

NT$32.13, and the 12-month NDF rate is NT$31.61.

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