The Chung-Hua Institution for Economic Research (CIER,
"Based on the government's latest statistics on export growth and stock prices for the third quarter, we revised upward our 2007 GDP growth forecast by another 0.8 percentage points," Wang Lee-rong (
However, the Taipei-based think tank trimmed its GDP growth forecast for next year to 4.16 percent -- down from the 4.41 percent it forecast in October -- because of expectations of a US economic slowdown, Wang said.
She also expressed concern over the rising consumer price index and said that the inflationary benchmark's annual growth would likely average 1.39 percent this year and rise 2.01 percent next year.
On a more positive note, private consumption is expected to post an annual growth of 3.33 percent in the fourth quarter and average 2.87 percent for the year. Growth next year is forecast to hit 3.08 percent, CIER said.
"Domestic demand is the only area that is expected to make crucial contributions to the local economy next year should the government provide some incentives to spur consumption," Wang said.
For example, she said, the government could take the initiative in raising civil servants' salaries to encourage businesses to hike wages.
Wang said that work should no longer be characterized by "hard labor," but rather as a "work smart" era. However, salaries in the industrial and service sectors on average rose only 1 percent from a year earlier.
CIER also forecast that the NT dollar would appreciate to NT$32.4 against the US dollar in the fourth quarter and average NT$32.84 for the year. The institute expects an increase to NT$32.07 next year.
Average interest rates for one-year savings deposits will climb to 1.93 percent this year and 2.16 percent next year, CIER said.
Wu Chung-shu (
"It is highly likely that private consumption growth will surpass 2 percent next year," Wu said.
"But forecasting a surge past 3 percent is a high call" given expectations of flat property and stock market performances and the looming uncertainty in the runup to elections, Wu said.
Globally, economic difficulties arising from the impact of the US' subprime mortgage crisis and the ensuing credit crunch are expected to last through the middle of next year.
Also at the seminar was Richard Kao (高子敬), president of Taiwan Securities Investment Advisory Co (台証投顧), who forecast that the NT dollar would trade between NT$31.5 and NT$32.5 next year against the greenback as capital outflow rises.
Based on the Big Mac Index -- a popular method of measuring the purchasing power parity between two currencies using the price of a Big Mac as a basis for comparison -- "the NT dollar is undervalued by 25 percent while the Chinese yuan is greatly undervalued by 54 percent," Kao said.
He predicted that the central bank would raise benchmark interest rates by 0.125 percentage points this month, another 0.125 percentage points in March and 0.25 percentage points in June "to the neutral 3.75 percent level."
There's also room for the US Federal Reserves to cut interest rates by at least 0.5 percentage points in the near future, he said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure