Economic growth is expected to slow to 3.81 percent next year because of deteriorating global economic sentiment, Academia Sinica said yesterday.
The forecast from the nation’s top research institute was lower than the 4.19 percent growth forecast by the government last month. It was also the lowest among several local research institutions in latest slew of outlook cuts.
Polaris Research Institute (寶華綜合經濟研究院) last week slashed its forecast for GDP growth for next year to 3.93 percent, while Taiwan Research Institute (台灣綜合研究院), the Chung-Hua Institution for Economic Research (中華經濟研究院) and the Taiwan Institute of Economic Research (台灣經濟研究院) projected 4.02 percent, 4.07 percent and 4.22 percent growth respectively.
“Considering that various economic data released this month, such as exports, industrial output and leading indicators, showed a downturn, we maintain a relatively conservative view of Taiwan’s -economic growth next year,” Ray Chou (周雨田), an economic research fellow at Academia Sinica told a media briefing.
The output sector is expected to grow 5.15 percent next year, with the input sector projected to expand 2.2 percent, Academia Sinica said in a report.
Meanwhile, the expansion of private consumption could slow to 2.72 percent next year, while private investment could rise 1.91 percent, the report said.
In line with market consensus, Chou expected the economy to bottom out in the first quarter of next year, the peak period for European countries’ debt repayment.
He forecast 2.73 percent economic growth for the first quarter next year, increasing gradually to peak in the fourth quarter at a rate of 4.57 percent.
Chou said the eurozone’s debt crisis, the stagnant US economy, a potential hard landing in China and the Middle East’s oil supply would be four key areas of global uncertainty, which could drag down economic growth in Taiwan next year to a worst case scenario of 2.07 percent.
However, in the event that some or all of these uncertainties fail to develop, they could drive economic growth up to as high as 5.64 percent, Chou added.
In addition, Chou expected the second stage of the early harvest program under the cross-strait Economic Cooperation Framework Agreement (ECFA), which is set to go into effect on Sunday, to be an additional driver for Taiwan’s export sector next year. That could offset some of the negative impact stemming from the European debt problem.
For this year, Academia Sinica also slashed its forecast for full-year GDP growth to 4.38 percent, from the 5.52 percent rate estimated in July, citing weaker momentum in the second half of the year.