Polaris Research raises 2007 growth forecast to 4.61%

Polaris Research Institute (寶華綜合經濟研究院) yesterday raised its economic growth forecast for Taiwan this year to 4.61 percent.

The institute forecast a 4.31 percent growth rate in June, while the government forecast a 4.58 percent rate in August.

"Taiwan's economy is expanding steadily on stable exports and moderately growing local demand," Liang Kuo-yuan (梁國源), president of the Taipei-based research institute, said at a media briefing yesterday.

Exports are expected to increase by 5.87 percent from last year, while imports should rise by 3.4 percent, the institute said.

Net exports are expected to contribute 2.07 percent of the GDP growth, down from 3.5 percent last year, a report released by the institute said.

Domestic consumption and investment are to increase by 2.97 percent and 6.51 percent respectively, the report said.

The private sector, together with government investment and consumption, would contribute 2.54 percent of economic growth this year, up from 1.12 percent last year, it said.

An improved employment market, a slight increase in the average wage and the easing of the credit abuse problem were seen as the major factors pushing up domestic demand.

Two strong typhoons and rising raw material prices are expected to push the consumer price index (CPI) to 2.51 percent in the fourth quarter, the institute said yesterday. But it said the CPI for the whole year would be 1.3 percent, less than the government's prediction of 1.46 percent.

The institute still believes the central bank will raise interest rates again in December.