The Chung-hua Institution for Economic Research (CIER, 中華經濟研究院) revised downward its GDP growth forecast for Taiwan this year to 4.58 percent from the 5.02 percent it forecast in July, citing rising uncertainties in the global economy and slowing business sentiment in the technology sector.
The Taipei-based think tank’s latest forecast was lower than the 4.81 percent full-year economic growth predicted by the Directorate-General of Budget, Accounting and Statistics in August.
“The slowing global economy in the second half of the year made us cut the forecast for Taiwan’s growth on private consumption, domestic investment, export and import trading for this year,” director of the institute’s center for economic forecasting Liu Meng-chun (劉孟俊) told a media briefing.
The institute estimated that the nation’s private consumption would grow 3.35 percent this year, with domestic investment increasing 0.47 percent, it said in a statement.
The nation’s exports are expected to surge 13.99 percent this year, with imports expanding 14.64 percent, the statement said.
For the second half of the year, the institute estimated that the economy would expand 3.52 percent in the third quarter — the lowest growth rate of the year — and rise 3.81 percent in the fourth quarter, Liu said.
The CIER said it now expected a 4.15 percent expansion for Taiwan’s economy next year, with growth gaining momentum quarter by quarter.
CIER president Wu Chung-shu (吳中書) said the central bank might keep holding policy interest rates at their current levels over the next year amid the global economic slowdown.
However, Wu did not expect the government to increase its spending to stimulate the economy because of the still stable growth momentum in Taiwan and the budget deficit.
The institute’s latest forecast did not factor in the impact of the new US-South Korea free-trade agreement (FTA), which is expected to take effect next year.
“The FTA’s influence on Taiwan would be limited in terms of the trading sector, as the tax-exempt items included in the agreement account only for a limited proportion of the nation’s exports,” Wu said.
However, the private investment sector would be influenced by the agreement, as the domestic environment for investment may be less attractive to foreign companies compared with South Korea, Wu added.
Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei, yesterday said he had no plans to cut his forecast for Taiwan’s GDP growth this year after the US Congress approved the FTA with South Korea on Wednesday.
Last month, Cheng trimmed his forecast for Taiwan’s GDP growth slightly to 4.8 percent for this year from the 4.9 percent he estimated earlier, given the worsening eurozone economy.
Meanwhile, Council for Economic Planning and Development Minister Christina Liu (劉憶如) said yesterday that Taiwan would not suffer from a so-called “double-dip recession” and would remain an Asian economic frontrunner no matter how the global economic situation unfolded.
Liu had said earlier that without stimulus measures, Taiwan’s economy would not improve in the fourth quarter of this year or even next year. Her warning came on the heels of a remark by Taiwan Semiconductor Manufacturing Co (台積電) chairman Morris Chang (張忠謀) that he saw no good omens for the global economy in the near term.
In an effort to alleviate public concern about the country’s economic well-being, Liu said on the sidelines of a legislative session that her previous remarks were mainly aimed at accentuating the need for Taiwan to be prepared for economic uncertainty in Europe and the US.
“Because the uncertainty is not expected to settle in the fourth quarter or next year and might even develop in a negative direction, Taiwan must craft response measures to cope with any possible adverse impact,” Liu said yesterday.
So far, the government has dealt with the challenge well.
“Therefore, we are faring better than many other Asian countries and will definitely remain a frontrunner,” she said.
Additional Reporting by Lisa Wang and CNA
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