Wed, Apr 17, 2013 - Page 13 News List

CIER revises GDP growth forecast to 3.63%

EXCHANGE RATE ROWS:The Taipei-based think tank said there is no financial crisis on the horizon, but currency wars could be a major challenge for the global economy

By Amy Su  /  Staff reporter

The nation’s economy may grow moderately this year, with no financial crisis expected to strike the global economy, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday, while revising upward its GDP growth forecast for this year to 3.63 percent.

That was compared with a 3.6 percent growth forecast the Taipei-based think tank made in December last year.

“The economy in Taiwan this year exhibits the traits of steady expansion,” CIER president Wu Chung-shu (吳中書) told a press conference.

The institute expects GDP in the first quarter to grow 3.28 percent from a year earlier — the slowest quarter of the year — followed by an acceleration in expansion quarter by quarter to 3.36 percent, 3.91 percent and 3.94 percent the rest of the year.

The think tank also forecast that the nation’s GDP growth next year would be 4.07 percent.

A strong rebound in private investment, which is expected to increase 5.62 percent from last year, would be the main driver for the nation’s economy this year, Wu said.

Private consumption would post 2.57 percent growth this year, with exports and imports expected to grow 5.25 percent and 5.03 percent respectively, the institute said in its report.

SinoPac Financial Holdings Co (永豐金控) chief economist Jack Huang (黃蔭基), who also attended the press conference, said no global financial crisis is expected this year, although the eurozone debt crisis remains worthy of scrutiny.

Inflationary pressures will not be an issue for this year either, Huang said, as the institute forecast a 1.6 percent rise in the consumer price index (CPI) this year, slowing from 1.93 percent last year.

However, inflationary pressures may resurface next year, after the government raises electricity prices in the fourth quarter of this year, Huang said.

Wu said the bombings in Boston in the US and the recent outbreak of H7N9 avian flu in China could impact Taiwan’s economy, but added that this would only be temporary and would not alter the nation’s improving economic outlook.

However, potential currency wars remain one major challenge for the global economy this year and the depreciation of major Asian currencies ahead may lead the central bank to appropriately cap the value of the New Taiwan (NT) dollar this year, said Liu Meng-chun (劉孟俊), director of the institute’s center for economic forecasting.

The NT dollar closed down NT$0.001 at NT$29.928 against the greenback in Taipei trading yesterday.

The institute forecast that the NT dollar would average NT$29.79 against its US counterpart this year, down from NT$29.62 last year.

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