Thu, Dec 27, 2012 - Page 13 News List

Think tank cuts forecasts

By Camaron Kao  /  Staff reporter

Yuanta-Polaris Research Institute (元大寶華綜合經濟研究院), a private think tank, yesterday trimmed Taiwan’s GDP forecast for this year and next year, citing the impact of austerity measures taken by governments around the world and decreasing private consumption in Taiwan.

The institute downgraded its economic forecast for Taiwan from 1.38 percent to 1.08 percent for this year, and cut next year’s forecast from 3.85 percent to 3.48 percent.

“The current economic condition can best be described as ‘the great malaise,’” institute president Liang Kuo-yuan (梁國源) said at a press conference.

Citing recent reports by the IMF, Liang said Europe and the US would continue implementing austerity measures, which are expected to decrease the momentum of global economic growth.

“Even if the US can solve its ‘fiscal cliff’ problem and the European debt crisis does not deteriorate, the global economic condition is still dire,” Liang said.

On the domestic economic front, private consumption is expected to be low because of a decline in disposable income, Liang said, citing the government’s plans to implement higher electricity rates and premium fees for the national health insurance system, as well as an overhaul of pension schemes and the implementation of capital gains tax on securities investment.

Accordting to the think tank’s estimates, private consumption growth will be 1.53 percent next year, down from its previous forecast of 3.1 percent. It also lowered this year’s private consumption forecast to growth to 1.23 percent from 1.53 percent.

Meanwhile, private investment is likely to contract next year because of lingering global economic uncertainties, with the institute forecasting only NT$239 (US$8.23 billion) billion in investment from the private sector next year, compared to NT$2 trillion this year.

On a positive note, the rate of inflation is likely to fall to 1.41 percent next year from 1.91 percent this year, the institute said. Both figures are lower than the institute’s previous estimates of 1.42 percent and 1.98 percent respectively.

“Food prices have been declining since September, and oil prices are not likely to rise in the near future because of rising oil production in the US,” Liang said.

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