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Robust exports lead TIER to increase its GDP forecast

The Taiwan Institute of Economic Research (TIER, 台經院) yesterday raised its GDP forecast to 4.21 percent, up from its April forecast of 4.09 percent, on robust exports.

For the first six months of the year, exports increased 7.5 percent to US$113.94 billion from a year ago, TIER said in a report, citing government statistics. Trade surplus jumped by 35.8 percent to US$10.54 billion in the period, TIER said.

For the whole year, the institute forecast exports would grow by 8.37 percent and imports increase by 8.04 percent with trade surplus swelling to US$23.77 billion from US$21.32 billion last year.

The economy was set to grow on the back of the improving employment market and vigorous stock market, TIER president David Hong (洪德生) said at a press briefing yesterday.

Consumer prices, the prime pubic concern these days, were predicted to rise 2.86 percent in the third quarter and 3.75 percent in the fourth, as a result of a low comparison base a year earlier and rising prices of oil and raw materials, TIER said.

The consumer price index (CPI) contracted 0.33 percent and 0.1 percent in the third and fourth quarter last year respectively.

The average CPI for the second half of this year is forecast to grow by 3.3 percent, and whole-year CPI is to increase by 1.96 percent, the institute said.

"There is no inflation concern so far because the central bank is inclined to raise interest rates," said Chen Miao (陳淼), a research fellow at TIER.

Sky-rocketing oil and commodity prices, however, have worried local manufacturers, depressing the business climate index for the manufacturing sector last month, which dropped 1.49 points to 115.75, TIER's survey showed.

The service industry was more positive, given that revenues for the banking, securities, insurance and transportation sectors have been rising, the survey showed.

The business climate index for the service industry last month was up 1.75 points to 116.27.
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