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CIER revises up forecast GDP growth to 4.55%

"Taiwan's economy unexpectedly expanded steadily for the first half."

Wang Lee-rong, director of CIER's Center for Economic Forecasting

The Chung-Hua Institution for Economic Research (CIER, 中經院) raised its economic growth forecast for the year to 4.55 percent, up from the 4.26 percent it predicted in July, on an improving domestic sector.

"Taiwan's economy unexpectedly expanded steadily for the first half," Wang Lee-rong (王儷容), director of the institute's Center for Economic Forecasting, told reporters. "The growth momentum is expected to continue through the next half."

The economic growth for the first half was 5.07 percent, outperforming South Korea's 5 percent and Thailand's 4.4 percent, Wang said.

Private consumption would increase by 2.8 percent, recovering strongly from the credit abuse storm last year, CIER said.

Private investment would rise to a three-year high of 5.83 percent, it said.

The consumer price index would rise 1.33 percent from 0.6 percent last year, mainly because of surging oil prices in the next half, as well as vegetable prices.

Crude oil for delivery next month reached a record-high US$90.02 per barrel in after-hours electronic trading on the New York Mercantile Exchange yesterday.

The local currency, which rose NT$0.023 to NT$32.572 against the greenback yesterday, would trade at an average of NT$32.86 per US dollar for the whole year, the institute said.

It predicted that GDP growth next year would be 4.41 percent and would be affected by a slower global economy.

Consumer spending is expected to rise again by 2.91 percent and private investment to climb by 4.94 percent, CIER said, adding that contributions from the domestic sector to the growth would increase next year.

Consumer prices would continue to climb, with a 1.98 percent increase next year because of continuing hikes in oil and raw material prices, CIER said.

The NT dollar would appreciate to NT$32.02 per US dollar next year, it said.

For the first eight months of the year, the value of energy imports reached NT$880 billion (US$27.02 billion), accounting for 18.8 percent of total imports in the period, according to government statistics. The percentage was the highest in 22 years.

But if prices keep rising and drive up gasoline prices and the wholesale price index by 10 percent, the GDP forecast for next year would shrink to 4.02 percent from the expected 4.41 percent, CIER said.
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