Taiwan’s economy is likely to see moderate growth next year following this year’s robust expansion as consumer spending and private investment further improve while the world continues its sluggish recovery, two think tanks said yesterday.
The Chung-Hua Institution for Economic Research (CIER, 中經院) and Polaris Research Institute (寶華研究院) said they expect GDP to increase an average of 4.55 percent and 4.62 percent respectively next year from this year when the economy could expand by the fastest rate in 20 years.
“Unemployment is expected to drop further next year while per capita income rises above US$20,000, boosting private consumption by 2.21 percent and private investment by 2.45 percent,” CIER said in a report.
Domestic demand will sustain the economy after a listless showing in recent years because of the sub-prime mortgage crisis and global financial storm, the report said.
Private investment, in particular, is forecast to expand 31.55 percent this year, a 45-year record, the report said, as major firms increase purchases of capital equipment.
Exports, which account for 70 percent of the nation’s GDP, are expected to grow 6.26 percent next year, from a strong 28.33 percent expansion this year, the report said.
CIER expects consumer prices to remain stable next year with the inflation level set to inch up 1.36 percent, from the 1 percent forecast for this year.
The New Taiwan dollar is forecast to trade at an average of NT$30.43 against the US dollar next year, the report said, predicting the jobless rate will ease to 4.83 percent next year, from an average of 5.26 percent this year.
The institute raised its forecast for GDP growth to 9.64 percent for this year, from 8.15 percent estimated in October as exports and private spending have been stronger than expected.
Polaris adopted a rosier view, lifting its forecast for GDP growth to 10.05 percent this year, from 8.52 percent predicted in September, with institute president Liang Kuo-yuan (梁國源) attributing that to the region’s rapid economic growth.
Liang said that he expected growth to slow next year because of a high base as well as a stagnant recovery in the West.
The quantitative easing by the US is likely to deepen currency market volatility next year with the NT dollar rising to NT$29.7 against the greenback, Liang said.
“A steep gain is unlikely as the central bank will intervene and keep the NT dollar in a certain range,” he said.
Polaris expects exports to increase 6.05 percent next year from this year while private consumption picks up 4.1 percent. Consumer prices are forecast to rise 1.8 percent next year from a modest 1 percent growth this year, the institute said.