The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday revised downward its forecast for Taiwan’s economic growth next year to 3.59 percent from the forecast of 4.29 percent it made in July.
The Taipei-based think tank also cut its GDP growth forecast for the nation this year from the 2.36 percent it forecast in July to 1.52 percent, the fifth straight time it had revised downward the forecast since July last year.
“Under the current conditions, the nation’s economy should have bottomed out in the third quarter, with the momentum likely to rebound in the fourth quarter,” CIER president Wu Chung-shu (吳中書) said at a press conference.
The institute’s quarterly report showed GDP may rise 1.42 percent in the third quarter, followed by a 4.26 percent expansion in the fourth quarter.
As for next year, the think tank expected the economy to be more balanced, with the contribution from domestic demand strengthening compared with that from external demand.
Taipei-based Standard Chartered Bank economist Tony Phoo (符銘財), who also attended the press conference, said the retail industry may be the major driver boosting domestic demand-related sectors next year.
Phoo added that domestic demand driven by the retail industry would likely contribute significantly to the nation’s economy next year.
Retail industry sales usually account for less than 40 percent of the nation’s exports, but have been climbing to more than 40 percent over the past two years, reflecting the strong performance of the industry, Phoo said.
Phoo added that the continuously strong performance of the tourism sector could in turn help boost sales in the retail industry.
The institute’s forecast for next year was generally in line with Phoo’s views.
In the next year, the retail industry is expected to post about NT$4 trillion (US$136.57 billion) in sales, with exports set to stand at about US$320 billion, its data showed.
The think tank forecast private consumption would rise 2.76 percent next year, up from the 2.12 percent growth recorded this year, the report said.
Private investment is expected to climb 6 percent next year, compared with a 2.11 percent contraction this year, the report said.
As for the external sector, the institute estimated exports would grow 6.44 percent next year, from the 1.09 percent drop this year, it said.
On the inflation front, the research institute expected the nation’s consumer price index (CPI) to show 1.97 percent growth this year and further exhibit a 1.59 percent expansion next year, both lower than the 2 percent critical mark.
The Directorate-General of Budget, Accounting and Statistics will update its latest forecast on the nation’s economy and headline inflation on Oct. 31.
In August, the agency estimated GDP would grow 1.66 percent this year, with the headline inflation index expected to rise by 1.93 percent.