Taiwan’s economic growth rate is likely to drop to 3.4 percent this year, but it will bounce back next year, the Asian Development Bank forecast yesterday.
The growth rate is forecast to fall from 4.04 percent last year on global uncertainty and China’s more moderate expansion, because China is Taiwan’s largest trading partner, according to the report which was released in Hong Kong.
The growth forecast was lower than the 3.85 percent projected by the Directorate-General of Budget, Accounting and Statistics in February and the Cabinet’s stated goal of 4.3 percent.
Although there are more positive business indicators than late last year, the gloomy global situation is set to limit exports, the Manila-based bank said in the report.
“Domestic demand should continue to provide a relatively strong base, supported by rising incomes reaching about US$21,000 per capita this year,” it said.
Taiwan’s economic growth would improve with better global conditions next year, but over the long run more research and development, and investment, were absolutely essential to foster “broad-based, stable growth through the diversification and restructuring of the economy,” the report said.
Greater domestic and international demand next year will also boost Taiwan’s growth rate to 4.6 percent, the report forecast.
It also forecast an economic growth rate of 6.9 percent this year and 7.3 percent next year for developing Asian economies.