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CIER raises its growth forecast

Backed by improving domestic consumption and investment, Chung-Hua Institution for Economic Research (CIER, 中經院) yesterday raised its GDP forecast for this year to 4.17 percent, slightly up from the 4.13 percent it predicted in November.

CIER also forecast that GDP growth would improve to 4.23 percent next year.

Domestic consumption is expected to increase by 2.8 percent, up from 1.53 percent last year, CIER said in a report. Domestic investment will grow by 1.82 percent, up from 0.2 percent last year, the research institution said.

"The domestic sector, which will contribute 2.83 percent to GDP growth this year, serves as a stronger pillar in the nation's economy this year," said Chou Ji (周濟), director at the CIER's economic forecast center.

The world economy has shown signs of slowing from last year, mostly because of the slowdown in the US property market, Chou said.

The growth rate in exports of goods and services is estimated to decline to 5.66 percent, down from 10.14 percent last year, CIER's report predicted. Imports of goods and services are to increase by 3.81 percent, down from 5.72 percent last year, the report said.

Moderate external and domestic demand also prompted it to revise its economic growth forecast from 4.2 percent to 4.25 percent.

With stronger consumption and rising raw material prices, the consumer price index is set to increase 1.25 percent this year, up from 0.6 percent last year, CIER said.

Higher domestic demand would help drive down the unemployment rate to 3.88 percent from 3.91 percent last year, CIER said.

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