TIER increases GDP growth forecast

The Taiwan Institute for Economic Research (TIER, 台灣經濟研究院) increased its GDP growth forecast for Taiwan this year yesterday from 4.29 percent to 4.3 percent on rising domestic economic confidence and solid export growth.

“The nation’s export growth in the first quarter was better than expected in a slow season,” Chen Miao (陳淼), an associate research fellow at TIER, told a press briefing.

Private investment in particular rose last month, with statistics showing that raw materials and manufacturing equipment imports saw year-on-year growth of 30 percent and 20 percent respectively — signs that domestic businesses were more willing to make investments in anticipation of an economic rebound, he said.

The institute’s GDP forecast, however, had not taken into consideration a possible economic boost resulting from better relations with China after the new government takes office next month.

“We will revise our GDP forecast once the new government has implemented its cross-strait direct flights program or opened up the country to Chinese tourists after July,” Chen said.

The think tank’s business climate survey found that the local manufacturing sector turned even more optimistic last month, with its biggest monthly jump since 1978, rising from 101.96 points in February to 120.42 points last month.

The manufacturing sector accounted for 23 percent of GDP, TIER president David Hong (洪德生) said.

Hong said demand in China and Asia showed no signs of weakening and that consumption and trade in the US has so far been largely spared by the subprime crisis in the US — both of which were good news for Taiwan’s export sector.

The institute, however, expressed concern over the nation’s growing inflationary pressures, saying that this year’s consumer price index would likely rise to 2.32 percent from last year’s 1.8 percent.

The institute also said that the New Taiwan dollar would reach an average NT$30.766 against the US dollar this year, up from last year’s average of NT$32.842. The NT dollar closed NT$0.004 higher at NT$30.408 in Taipei yesterday.