Thu, Dec 28, 2006 - Page 11 News List

Economic outlook index for Taiwan drops: CEPD

GLOBAL IMPACT A drop in the growth of world trade is expected to pull down the nation's exports of goods and services next year, but domestic demand should recover


Taiwan's composite index of leading economic indicators -- a key prediction of future economic activity -- fell 0.1 percent to 109.0 points last month from the previous month, the nation's top economic policymaker said yesterday.

The indicators dropped 1.0 percent from October.

The Council for Economic Planning and Development (CEPD) said fall in the index last month was the result of declines in two of its seven components -- the wholesale price index and the value of exports clearing customs.

However, new orders received by the manufacturing sector, land approval for construction, working hours in the manufacturing sector, the stock market and money supply growth had improved, the council said.

The council's composite index of coincident economic indicators, which is a reflection of the current pace of economic activity, was unchanged at 109.7 points.

The council's indices for leading and coincident indicators are both based on a 2001 benchmark of 100 points.

The CEPD also said that its monitoring indicators for last month flashed a "yellow-blue light," signalling an economic slowdown.

Meanwhile, the country was expected to post an economic growth rate of 4.08 percent next year, with an increase of 2.79 percent in private consumption, a private think tank forecast on Tuesday.

The Taiwan Research Institute (TRI, 台綜院) predicted that the economic growth rate for this year would reach 4.35 percent -- compared with the average growth rate of 4.26 percent recorded between 1995 and last year.

Citing a forecast by Global Insight Inc, a forecasting company based in Waltham, Massachusetts, the TRI said that Taiwan's exports of goods and services would increase only 5.52 percent next year -- compared with a rise of 10.21 percent this year -- as the growth in world trade was expected to decline from 7.5 percent this year to 7.3 percent next year.

However, the TRI predicted that the nation's domestic demand would revive significantly next year owing to the resolution of the credit card debt problem and the expected opening of Taiwan to Chinese tourists.

As a result, private consumption is likely to expand 2.79 percent next year, compared with just 1.43 percent this year, the TRI said.

The TRI's 4.35-percent GDP growth forecast for this year is less optimistic than the forecasts of some other agencies.

The Directorate General of Budget, Accounting and Statistics (DGBAS) projected 4.39 percent growth and the Polaris Research Institute forecast (寶華經濟研究院) 4.38 percent growth.

But the TRI's figure is better than a 4.32 percent growth projection from the Academia Sinica, the nation's top research institute.

The Chung Hua Institution for Economic Research (中經院) also put the figure at 4.23 percent, and the Taiwan Institute of Economic Research (台經院) at 4.01 percent.

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