The economy is expected to expand less than 6 percent for the full year as growth could weaken later this year once the government’s economic stimulus programs come to an end, a local think tank forecast yesterday.
The Taiwan Institute of Economic Research (TIER, 台經院) revised upward its GDP growth forecast for Taiwan to 5.94 percent this year from its previous estimate of 5.11 percent in April, making it the least bullish among local think tanks.
“The government’s economic stimulus measures are starting to exit the market, prompting economic growth in the second half of this year to decelerate,” Chen Miao (陳淼), director of TIER’s macroeconomic forecasting center, told a media briefing.
The Taipei-based research institute forecast that the economy would expand 7.84 percent in the second quarter, 3.35 percent in the third quarter and 0.74 percent in the fourth quarter, which contrasted with the government’s estimates of 7.66 percent, 4.4 percent and 0.69 percent.
When asked whether TIER’s predictions were more conservative than its counterparts, Chen said: “[Our prediction] is nearly 6 percent, which is not low … the economy is still growing steadily.”
With the government expanding public construction projects, private investment is expected to increase 19.37 percent this year, which contributed most to GDP growth, TIER said, adding that fixed investment will grow 13.39 percent this year.
Domestic consumption will likely grow 2.27 percent, higher than the government’s prediction of 1.99 percent, because of tax reduction measures and employment incentive programs implemented by the government, TIER said.
As emerging markets continue to recover, last month’s global PMI index exceeded the benchmark of 50 points — indicating expansion. The nation’s exports are expected to grow by 30.19 percent this year, while imports will likely increase 36.75 percent.
The trade surplus for the full year is forecast to reach US$26.71 billion, TIER said.
In terms of consumer prices, TIER expected inflation to rise 1.65 percent this year, saying that there is still no inflationary pressure. The wholesale price index will rise 6.18 percent for the full year.
Asked whether the central bank will raise interest rates later this year, Chen said “there’s still room for interest rates hikes” in the second half of the year as the economy has shown clear signs of recovery and therefore does not need low interest rates to stimulate investment.
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