Wed, Jul 20, 2011 - Page 12 News List

Academia Sinica forecasts GDP growth of 5.52%

RESTORED CONFIDENCE:The research institute said that private consumption is forecast to expand 4.05 percent as wage recovery increases consumer spending

By Crystal Hsu  /  Staff Reporter

Academia Sinica yesterday raised its forecast for the nation’s GDP growth to 5.52 percent for this year, from its previous estimate of 4.71 percent in December last year, citing stronger private investment and healthy external demand from the Asia-Pacific region.

“Private investment is expected to grow 5.72 percent [annually], facilitated by warming cross-strait trade ties and Japan’s post-quake reconstruction,” Ray Chou (周雨田), an economic research fellow at the institute, told a media briefing.

New major private investments in the first quarter surpassed the average of recent years, Chou said, citing data from the Ministry of Economic Affairs.

The first six months saw foreign investment reach 65.03 percent of the government’s target for this year, while investments by overseas Taiwanese hit 62.9 percent of the goal, he said.

Private consumption is forecast to expand 4.05 percent this year from the previous year, as wage recovery in both private and public sectors will further increase consumer spending, Chou said.

“The economy’s steady growth will continue to restore consumer confidence,” he said. “The people will spend more because of the improving job market and pay raises.”

The number of workers hired by the industrial and services sectors gained 3.34 percent as of the end of April from last year, while real wages rose 2.75 percent, according to the Directorate-General of the Budget, Accounting and Statistics.

Taiwan’s jobless rate fell to 4.27 percent in May, noticeably lower than developed economies, but higher than the nation’s major rivals, including Hong Kong, Singapore and South Korea.

“The figures show the government needs more forward-looking policies to help average people partake in the benefits of the economic growth,” Chou said.

To that end, the government could raise the nation’s minimum wage by at least 3 percent, as it is quite low compared with most other countries, he said.

Externally, exports are expected to expand 8.52 percent this year from last year, while imports may grow 4.79 percent, Academia Sinica said.

Strong demand from major Asia-Pacific trading partners for Taiwanese electronics will help offset the slowdown in Europe and the US, as fiscal debt woes and high unemployment continue to drag on their economic recoveries.

“Despite downside risks, the global economy remains on the track of recovery with the IMF -forecasting a 4.3 percent expansion for this year,” Chou said.

The institute expects consumer prices to remain moderate this year, rising 2.16 percent, from 0.96 percent last year.

The appreciation in the New Taiwan dollar has helped absorb some inflationary pressures arising from increases in international crude oil and raw material prices, Chou said.

The NT dollar is expected to trade at an average of NT$28.83 against its US counterpart this year, the Academia Sinica said, adding that the currency could strengthen to NT$28.5 this quarter and NT$28.4 next quarter.

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