The growth of Taiwan’s GDP for next year is expected to slow to 4.24 percent largely on slowing global demand, the Taiwan Research Institute (TRI, 台綜院) said yesterday.
The institute in June raised its forecast for Taiwan’s economic growth this year from 5.88 percent to 10.03 percent on a strong rebound in exports after the global financial meltdown from 2008 to last year.
However, export momentum is likely to fade to some extent next year as global demand could be compromised by a slowing US economy and the lingering impact of debt problems in Europe, the TRI said.
The institute said the rising price of raw materials caused by abnormal global weather is likely to put upward pressure on production costs for local manufacturers, which in turn could undermine Taiwan’s exports.
As the US has stepped up its second round of quantitative easing by pumping funds into the market to boost its economy, idle money is expected to continue to spread to the markets in Asia and further lift the value of Asian currencies, the think tank said.
As a result, the average value of the New Taiwan dollar could rise to NT$29.23 against the US dollar early next year and hover around NT$29 in the second half of the year.
A strong New Taiwan dollar is expected to hurt Taiwan’s exporters’ global competitiveness and further drag down exports.
Earlier this month, another think tank, the Chung-Hua Institution for Economic Research, predicted that Taiwan’s GDP would grow 4.55 percent next year, slowing from the estimated 9.64 percent for this year.
Last month, the government revised downward its economic growth forecast for this year to 4.51 percent from a previous estimate of 4.64 percent.
The government has forecast economic growth of 9.98 percent for this year.