As an increasing number of countries fall victim to the global financial crisis, economic projections on Taiwan’s performance this year have diverged, with foreign research houses notably more pessimistic compared with their Taiwanese counterparts.
Most Taipei-based think tanks forecast that the nation would still post positive albeit small GDP growth of between 0.52 percent and 1.24 percent this year, despite falling exports and shrinking private consumption.
EXPORTS
But foreign research bodies project a gloomier picture, forecasting that the Taiwanese economy may contract up to 3.3 percent this year as rising government investment would not be able to compensate for falling foreign trade, the mainstay of the nation’s export-dependent economy.
The official statistics agency, the Directorate-General of Budget, Accounting and Statistics (DGBAS), is by far the most optimistic, predicting GDP growth of 2.12 percent, aided by the government’s economic stimulus package.
According to the DGBAS, the government’s NT$450 billion (US$13.31 billion) spending program could raise GDP growth by 1.59 percentage points, while the consumer voucher plan and Chinese tourists could contribute another 0.64 and 0.5 percentage points respectively.
The Council for Economic Planning and Development told a recent news conference that GDP growth could rise even further to 2.5 percent if the government could make use of all resources available.
MILD
Domestic think tanks are also forecasting growth, but at a more subdued pace.
The Academia Sinica (中研院), the nation’s top research institute, last month said that GDP would grow at a seven-year low of 0.56 percent.
Wu Chung-shu (吳中書), an economic research fellow at the institute, cautioned that this might even be an over-optimistic view if the government fails to carry out its stimulus program in a prompt and effective manner.
Chung-hua Institution for Economic Research (中經院) early last month revised its GDP growth projection to 1.24 percent and urged the government to focus on stimulating domestic demand rather than boosting exports in its attempt to battle the global downturn.
The Taiwan Institute of Economic Research (TIER, 台經院) and Polaris Research Institute (寶華綜合經濟研究院) put their forecasts at 0.89 percent and 0.52 percent respectively on expectations that government spending could avert an economic contraction.
PESSIMISM
Foreign research houses disagree, however.
BNP Paribas, France’s largest financial services provider, forecast earlier this month that the global recession would dampen demand for Taiwanese goods, causing its economy to contract by 3.3 percent.
The Economist Intelligence Unit, the research arm of the Economist, reached a similar estimate of minus 2.9 percent for the nation, the worst performer in comparison with the three other Asian tigers —Singapore, Hong Kong and South Korea.
Global Insight said last month that the Taiwanese economy would shrink by 1.3 percent this year as exports contract.
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