Wed, Apr 20, 2011 - Page 12 News List

CIER cuts GDP growth to 4.29%

JAPANESE EFFECT:The think tank said that Taiwan’s forecast GDP growth this year could slow further if Japan’s economy falls harder in the wake of the ongoing disaster

By Amy Su  /  Staff Reporter

The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday revised downward its forecast for GDP growth this year to 4.29 percent from the 4.55 percent it forecast in December, citing the impact from Japan’s massive earthquake and tsunami.

“The nation’s economic growth this year will be negatively affected by Japan’s earthquake, especially in the second quarter,” Wang Lee-rong (王儷容), director of the institute’s center for economic forecasting, told a media briefing.

The Taipei-based think tank expected GDP growth to rise 3.94 percent in the second quarter and 4.49 percent in the second half of the year because of a lower base and strong exports, Wang said.

The institute’s research model was based on the IHS Global Insight’s latest forecast, which revised Japan’s GDP growth downward to zero this year from 1.1 percent growth, CIER researcher Peng Su-ling (彭素玲) said.

As a result of this change, the institute cut its GDP forecast for Taiwan by 0.31 percentage points, Peng said.

Taiwan’s GDP growth could drop even lower if the Japanese economy falls further in the wake of the radioactive disaster and ensuing power shortage, Wang said.

“At the most, Taiwan’s GDP growth could decrease by 0.64 percentage points for this year, on the assumption that Japan’s full-year GDP contracts by 1.5 percent,” Wang said.

Although researchers generally thought the Japanese quake would only have a limited impact on the global economy, Su Hsien-yang (蘇顯揚), director of the institute’s Japan center, said the Taiwanese economy would be more affected because of the close connection to Japan’s supply chain.

Taiwan should grab the opportunity to learn more high-level skills from Japan, as it plans to deepen its cooperation with other countries after the quake, Su said.

As to Standard & Poor’s negative outlook on US government debt, Wang said this could also have a negative impact on Taiwan’s GDP growth, but it was too early to provide estimates.

The institute expected Taiwan’s full-year inflation to grow at a steady 1.78 percent, while the wholesale price index could increase 3.35 percent this year.

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