The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday cut its GDP growth forecast for the nation this year from the 3.55 percent it forecast in April to 2.36 percent, due to the impact of near-zero growth in the second quarter because of global economic uncertainties.
The Taipei-based think tank’s latest forecast was higher than the 1.94 percent GDP growth estimated by Academia Sinica last week.
“Although economic momentum in the second quarter was weak, our overall economic outlook for this year is not that pessimistic [compared with Academia Sinica’s forecast],” CIER president Wu Chung-shu (吳中書) told a press conference.
Wu said the nation’s exports showed a contraction in the first six months due to the impact of various global economic uncertainties led by the eurozone’s debt crisis, further dragging down the GDP growth rate and the institute’s growth forecast.
However, the nation’s overall economic momentum for this year may not be as slow as during the global financial crisis of 2008 and 2009, Wu added.
The institute forecast GDP to grow just 0.18 percent in the second quarter from a year earlier, worse than the 0.39 percent annual growth posted in the first quarter, an indication that the second quarter could be the bottom of this round of the economic cycle.
However, the economy in the second half of the year may rebound from the first half by rising 3.48 percent and 5.13 percent in the third and fourth quarters respectively, as exports recover from their slump, the institute said in its quarterly report.
The institute expects the annual growth of exports to reach 0.41 percent this year, with imports to slide 0.25 percent from a year earlier.
On the domestic demand front, private consumption is expected to rise 1.91 percent this year, while private investment may fall 2.23 percent, as most companies in Taiwan maintain a relatively conservative attitude on capital expenditure, the report said.
Since various domestic institutes have revised downward their latest forecasts for economic growth this year, it seems increasingly likely that the Directorate-General of Budget, Accounting and Statistics (DGBAS) will follow suit and may cut its full-year growth forecast next Tuesday.
In May, the DGBAS estimated the nation’s economy would grow 3.03 percent this year.