Sat, Dec 15, 2012 - Page 14 News List

Rebounding economy may drive GDP growth: TRI

By Amy Su  /  Staff reporter

The Taiwan Research Institute (TRI, 台灣綜合研究院) yesterday slashed its GDP growth forecast for this year to below 1 percent, as recovering economic momentum in the fourth quarter remained sluggish.

The think tank’s latest forecast for GDP growth stood at 0.98 percent, down from the 2.52 percent it estimated in June, making it the domestic economic institute setting the weakest growth forecast for this year.

The institute’s forecast was also lower than the 1.13 percent growth estimated by the Directorate-General of Budget, Accounting and Statistics (DGBAS) last month.

“The government expected GDP to grow 2.97 percent in the fourth quarter from a year earlier, which would be difficult to attain from our perspective,” TRI president Wu Tsai-yi (吳再益) told an economic outlook conference.

Under the think tank’s forecast, the economy could expand 2.41 percent in the fourth quarter from a year earlier, with global economic uncertainties continuing to affect economic momentum.

However, in line with the view of other local major think tanks, Wu said the domestic economy may have started rebounding from its lowest point, with recovering momentum driving GDP growth next year.

The institute forecast Taiwan’s GDP growth next year at 3.57 percent, mainly driven by increased private investment and output, according to its report.

Wu said he did not expect inflation to continue being a major issue for the economy either this year or next year, as the institute expected the headline rate of inflation would remain under 2 percent.

The institute predicted the headline rate of inflation would increase by 1.95 percent this year from last year, with growth of 1.37 percent next year.

However, TRI founder Liu Tai-ying (劉泰英) expressed concern over deteriorating fixed capital formation over the past 10 years.

“Taiwan’s economy may not maintain its momentum in the future without growth in fixed capital formation,” Liu said.

The institute expected fixed capital formation to show a 3.12 percent decline this year, while rebounding 3.09 percent next year, mainly driven by rising private investment, which could increase 5.71 percent next year, from a 1.74 percent decrease this year.

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