The Taiwan Research Institute (TRI, 台綜院) yesterday unveiled its forecast for the nation’s GDP growth, saying the economy would contract 4.45 percent this year on slumping exports as well as private investment and consumption.
Acting institute president Wu Tsai-yi (吳再益) said that while the worst of the downturn appeared to have passed in the first quarter, the outlook remained gloomy and uncertain for the rest of the year.
“With external and domestic demand in the doldrums, the economy is unlikely to see a meaningful rebound in the second half,” Wu told an economic forum. “It is true, however, that the stock and housing markets have showed signs of recovery.”
The Taipei-based think tank said GDP would decline 8.13 percent and 3.01 percent this and next quarter respectively and post a 4 percent growth in the final quarter.
Wu said it would take a long time for the world economy to recuperate from the financial crisis, although leading indicators in major countries have reported encouraging improvements.
Exports, which account for 70 percent of GDP, are expected to drop 14.85 percent this year, sliding 22.69 percent and 13.06 percent in the second and third quarters respectively, the report said. The figure is expected to turn positive to 7.17 percent in the fourth quarter, the report said.
Private investment was forecast to shrink 28.9 percent, from a decline of 13.28 percent last year, as firms continue to adopt a conservative strategy amid the global downturn, Wu said. He said private consumption would register a bare 0.35 percent growth this year, thanks to consumer vouchers and other stimulus measures, even though rising unemployment would prompt the public to minimize spending.
The government and state-owned enterprises have sought to boost GDP by increasing their investment and consumption 14.36 percent and 3.16 percent respectively, the report said. However, Chou Ji (周濟), a professor of economics at Shih Hsin University, said the role public sectors can play is limited. He said the recovery would likely adopt a semi-V shape, meaning the economy would pick up modestly after hitting bottom, but remain sluggish for a protracted period.
The institute was slightly more optimistic than Polaris Research Institute (寶華綜合經濟研究院), which said a day earlier that the economy would drop 4.6 percent this year.
Academia Sinica, meanwhile, put the decline at 3.46 percent last week, while the Chung-hua Institution for Economic Research (中經院) in April forecast a contraction of 3.59 percent. The government has forecast a drop of 4.25 percent.
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