In response to robust exports scheduled for the next half of the year, Polaris Research Institute (寶華綜合經濟研究院) yesterday revised its GDP forecast to 4.31 percent, up from 4.25 percent in March.
Exports are expected to increase by 6.55 percent from last year, while imports should rise by 3.81 percent, the institute said. Domestic consumption, which was expected to recover from the credit abuse storm this year, did not perform as expected and should increase by only 2.91 percent, it said.
The low increase in household disposable income and salaries was a result of the weak consumption sector, Liang Kuo-yuan (
The nation's average salaries increased by 1.14 percent last year, while GDP per capita climbed by 3.46 percent, Liang said, citing government statistics.
The figures showed that the increase in GDP was mainly a result of company activities rather than individuals, which discouraged private consumption, he said.
The recent boom in the local stock market may boost consumption, depending on how long the positive trend continues, Liang said.
The benchmark TAIEX rose yesterday to a seven-year high, closing at 8755.88.
Turnover was NT$199.51 billion (US$6.05 billion), the highest in a single day since May last year.
By sector, the service industry was expected to contribute 72 percent of GDP growth, and the manufacturing industry should account for 23 percent, the report said.
Despite the seemingly vibrant exports, Liang is concerned that the nation's competitiveness could be overshadowed by neighboring rivals.
The competitiveness of the service industry, the powerhouse of the nation's economy, was obviously lower than the sector in Hong Kong and Singapore, Liang said.
Taiwan's strong electronics manufacturing industry, however, is highly threatened by competition from South Korean rivals, Liang said.
Fortunately, the NT dollar had depreciated compared with other Asian currencies, which helped maintain some advantage for Taiwanese exporters over their rivals, Liang said.
"It will be a major problem to local exporters when the NT dollar starts to rise, which could further accelerate export growth in South Korea," Liang said.
The weak NT dollar had caused significant capital outflow, and therefore the central bank may raise benchmark interest rates by 0.125 percentage points today, he said.
The NT dollar, following recent interventions by the central bank, is expected to trade at NT$33 against the US greenback for the next six months, he said, citing the institute report.
The local currency yesterday rose by NT$0.161 to close at NT$32.981 against the US dollar.
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