The Chung-Hua Institution for Economic Research (CIER, 中經院) yesterday revised upward its GDP forecast for Taiwan this year to 8.15 percent from its previous estimate of 6.94 percent on the back of rising domestic consumption and investment.
The institute also forecast an average foreign exchange rate of NT$31.68 against the greenback for the full year.
The Taipei-based think tank predicted that domestic investment would rise 17.03 percent from a year ago for the full year, posting its highest growth in more than two decades, and that private consumption would increase 2.72 percent year-on-year.
“The sharp GDP growth of 12.53 percent in the second quarter was better than our expectations and third-quarter data look bullish,” Wang Lee-rong (王儷容), director of the institute’s Center for Economic Forecasting, told a media briefing.
CIER forecast that the economy would expand 6.71 percent in the third quarter and 1.2 percent in the fourth quarter.
Growth in the first half of the year would account for more than two-thirds of the expansion for the full year, it said.
With Asian currencies under increasing pressure to appreciate, the institute forecast that the New Taiwan dollar would average NT$30.86 versus the US currency in the fourth quarter.
The NT dollar is likely to trade at an average of 31.68 per US dollar this year and 30.42 next year, compared with an average of 33.06 last year, the institute said.
Rick Lo (羅瑋), senior vice president for macroeconomic research at Fubon Financial Holding Co (富邦金控), said that the recent appreciation of the NT dollar was a result of hot money flooding Asia, adding that the US dollar could start picking up strength in the second quarter of next year.
“The US economy may show signs of steady growth in the second quarter of next year when the treasury bills it issued to pump more money into the market to stimulate the economy start maturing,” Lo said during the press conference.
Although a weak US dollar has prompted raw material prices to rise, the consumer price index is forecast to expand only 1.08 percent this year, while the wholesale price index is expected to rise 5.62 percent, CIER said.
Because consumer confidence in the economy is still shaky, retailers are reluctant to pass on the increase in raw material costs, CIER vice president Wang Jiann-chyuan (王健全) said.
Unemployment is expected to drop to 5.06 percent in the fourth quarter and average 5.29 percent for the full year, CIER said, adding that the jobless rate would not fall below 5 percent until next year, when the figure is expected to drop to 4.86 percent.
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