Despite bearish forecasts by economists at home and overseas for the nation’s GDP growth next year, the Council for Economic Planning and Development (CEPD) yesterday unveiled the government’s ambition to pursue 2.5 percent growth, driven chiefly by government investment worth NT$555.6 billion (US$16.73 billion).
CEPD officials said that to achieve the agency’s goal, all public resources must be fully utilized, provided there is no additional external shock such as the subprime crisis that sparked the current financial storm.
“Despite the global economic downturn, we believe the nation has the potential of achieving GDP growth of 2.5 percent next year,” Cheryl Tseng (曾雪如), director of the council’s overall planning department.
Domestic and foreign research institutes put the growth at between minus 3 percent and 4.12 percent.
Defending the council’s projection, Kao said the government was to increase its investment expenditure by 22.5 percent next year from this year and will press ahead with deregulation and improving ties with China to help spur economic growth.
It is regular practice for the council to set economic growth goals for the nation and Tseng said it was not uncommon for the actual growth to exceed the potential figures.
The official pointed out that the government set the potential GDP growth at 4.9 percent from 2004 to last year, but the real number reached 5.2 percent.
The prospective growth forecast is higher than the 2.12 percent prediction by the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Nov. 20.
Tseng attributed the gap of 0.3 percent to rising amounts for assorted stimulus measures.
The cost for the consumer voucher plan, for instance, has been raised from NT$82.9 billion to NT$85.7 billion after the government lowered qualifications for potential recipients, Tseng said.
The tax reduction recently passed by the legislature will increase disposable income among average taxpayers, allowing them to spend more, Tseng added.
The council said unemployment and consumer price index would gain 4.5 percent and 0.38 percent next year, respectively.
Looking to the medium-term future, the economic planning agency said the nation could achieve an average of 5 percent GDP growth between next year and 2012, with the unemployment rate to hover around 3 percent.
Tseng said unemployment would pose a tough challenge in the coming years as the labor force is forecast to contribute only 17.6 percent to prospective growth.
York Liao (廖耀宗), secretary-general of the council, dismissed concern the government was overly optimistic, saying the government had adopted disciplined measures aimed at ensuring agencies on all levels carry out the stimulus package effectively.