Academia Sinica, the nation’s top research institute, yesterday revised its forecast for Taiwan’s economic growth for the full year to 6.89 percent, up from its previous prediction of 4.73 percent in December last year, on the back of Asia’s strong economic recovery.
However, the institute warned that the still-ailing job market would hold back domestic consumption this year, which is expected to see a marginal growth of 1.95 percent year-on-year. That compared with 1.37 percent recorded last year.
“Although the jobless rate has gradually declined with the government’s employment initiatives, May’s unemployment level was 5.14 percent, which is still higher than that of Hong Kong, South Korea and Singapore,” Ray Chou (周雨田), a research fellow at Academia Sinica, told a media briefing.
Academia Sinica predicted that the economy would expand 8.15 percent in the second quarter, 5.65 percent in the third quarter and 1.79 in the fourth quarter, after the first quarter’s growth of 13.27 percent, higher than China’s 11.05 percent.
Chou said that rising private investment because of the recently signed Economic Cooperation Framework Agreement (ECFA) with China would be the top contributor to GDP growth this year. Real private investment is expected to increase 20.26 percent from a year ago, compared with a 18.38 percent decline last year.
Citing data by the Ministry of Economic Affairs, Academia Sinica said that the total value of investment deals — with a focus on consumer electronics — in the first quarter reached about NT$386 billion (US$12 billion), up 264.4 percent from a year ago.
With exports and imports posting substantial growth on rising global demand in the first half of the year, Chou forecast that shipments would edge up 20.57 percent this year thanks to closer cross-strait trade ties, while imports would see a 23.48 percent gain.
“There’s a 25 percent chance that the economy could expand more than 8.17 percent this year if the middle and long-term structural problem of the eurozone debt crisis were resolved and if the ECFA could come into effect in September,” Chou said.
Meanwhile, consumer prices are expected to see a moderate 1.45 percent rise for the full year, compared with a contraction of 0.87 percent recorded last year, Academia Sinica said, noting that inflationary pressures are not imminent in the short term.
As the central bank continues to absorb excess funds in the banking system, annual growth of the M1B and M2 monetary aggregates will likely drop to 14.89 percent and 4.87 percent respectively. The local currency is expected to average NT$32.02 against the US dollar for the full year.
Remaining optimistic about the European sovereign debt crisis, Chou said the global economy would not likely see a double-dip recession, adding that Taiwan’s economy could grow about 4.5 percent next year — the average over the past decade.
Other local research institutions have also issued economic growth forecasts for this year, including 6.94 percent by the Chung Hua Institution for Economic Research, 6.82 percent by the Polaris Research Institute and 5.88 percent by the Taiwan Institute of Economic Research (台經院).
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