The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday forecast that private consumption would grow 3.82 percent this year from last year, marking the highest growth since 2004, thanks to the government’s pay raise for civil servants and an improving job market.
“Private consumption will drive up the economy in the second half of the year, especially because of strong seasonal demand in the service industries,” Chen Miao (陳淼), director of the institute’s macroeconomic forecasting center, told a media briefing.
The Taipei-based think tank expects domestic demand, which includes private consumption and private investment, to play an important role in lifting the economy, Chen said, adding that its growth momentum would outpace exports in the second half.
Unlike private consumption, however, fixed-capital domestic investment is only expected increase 1.79 percent this year from last year because of a high comparison base, the institute said in a report.
TIER yesterday slightly revised down its forecast for the nation’s GDP growth forecast this year to 5.7 percent, from the 5.72 percent forecast it made in April.
TIER president David Hong (洪德生) said the slight cut did not mean the institute had turned less optimistic about the economy.
“We still think the economy would continue to expand moderately this year; the revisions only reflected several changes on the institute’s estimates for the fourth quarter,” Hong said.
The institute’s forecast is still the highest among local think tanks. Earlier this month, Polaris Research Institute (寶華綜合經濟研究院) said it expected GDP growth to rise 5.2 percent this year, while Chung-Hua Institution for Economic Research (中華經濟研究院) and Academia Sinica both forecast 5.02 and 5.52 percent growth respectively.
TIER’s forecast is also higher than the 5.06 percent growth forecast made by the Directorate-General of Budget, Accounting and Statistics (DGBAS) in May.
On the inflation front, consumer prices are expected to rise 2.41 percent this year, with inflationary pressures rising in the second half of the year, Chen said, adding that the consumer prices might grow 3.4 and 3.31 percent in the third and fourth quarters respectively.
Exports are likely to expand 13.74 percent this year, while imports may rise 14.37 percent from a year earlier, the report said.
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