Wed, Apr 29, 2009 - Page 12 News List

TIER trims forecast for GDP growth

TAKING A PLUNGE:David Hong, the president of TIER, said slumping raw material and oil prices as well as an investment freeze were responsible for sluggish imports

By Crystal Hsu  /  STAFF REPORTER

The Taiwan Institute of Economic Research (TIER, 台經院) yesterday trimmed its forecast for GDP growth to 0.11 percent this year on concerns of worsening exports and private investment amid the global recession.

The think tank, which predicted in January the economy would grow 0.89 percent, said the downturn is likely to reverse in the third quarter following a revival in external demand.

“We revised down the GDP growth projection for the second time [this year] because exports and private investment are deteriorating faster than expected,” Chen Miao (陳淼), director of TIER’s macroeconomic forecasting center, told a media briefing.

Exports are forecast to contract 9.19 percent this year, rather than gain 2.13 percent as predicted earlier, the report showed.

Chen attributed the prediction to a continued slowdown in the global economy. Outbound shipments are expected to contract 17.91 percent in the second quarter following a 36.64 percent decline in the first three months, the report said.

However, the institute predicted that foreign sales would pick up 4.7 percent and 18.17 percent in the third and fourth quarters, respectively.

The economy is expected to follow a similar course — with GDP shrinking 5.94 percent and 0.78 percent in the first two quarters and recovering by 1.83 percent and 5.61 percent in the third and fourth quarters, the report said.

TIER president David Hong (洪德生) said the nation is likely to report a trade surplus of US$25 billion, compared with US$15.2 billion last year, caused by a plunge in imports.

These are expected to drop 13.87 percent this year after posting 3.63 percent growth last year, the report said.

Hong said slumping raw material and oil prices as well as an investment freeze account for sluggish imports.

Companies have delayed or called off expansion plans amid international economic woes, Hong said.

Meanwhile, private consumption is predicted to retain a bare 0.62 percent increase, despite shopping vouchers and other stimulus measures, the report said.

Against this backdrop, the institute said the New Taiwan dollar will come under pressure to weaken versus the greenback in the short run.

The local currency is forecast to trade at an average of NT$33.1 against its US counterpart, down 4.99 percent from NT$31.53 last year, the report said.

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