The Taiwan Institute of Economic Research (TIER, 台經院) yesterday upgraded its annual GDP growth forecast for the nation to 3.71 percent this year from the 3.49 percent it forecast in January, citing rising domestic investment.
However, the institute said it was too early to gauge the possible impact of the risk of H7N9 avian influenza on the economy, after Taiwan on Wednesday reported the first case of the bird flu outside China.
Increased investment by the semiconductor, LCD and LED industries is also expected to help boost private consumption, TIER president David Hong (洪德生) said at a press conference.
Private investment is expected to grow 5.67 percent this year, up from the 4.43 percent the institute forecast in January, while private consumption will increase 2.52 percent, rather than the 2.41 percent it previously estimated, the institute said.
Recent government data showed exports in the first quarter expanded less than expected, while export orders — an indicator of the nation’s outbound shipments in the next one to three months — declined both sequentially and annually in the quarter.
As a result, the think tank trimmed its export growth forecast for last quarter to 2.45 percent from an earlier forecast of 3.78 percent, but upgraded its growth forecast to 5.4 percent for the year, from its previous 4.96 percent, to reflect a better outlook for the electronics industry.
“Apple Inc has said it would delay the launch of its new smartphones by four months, while some LED and solar energy factories in China are in trouble, which would benefit their competitors in Taiwan,” said Gordon Sun (孫明德), director of the institute’s economic forecasting center.
As for the impact of a potential H7N9 outbreak, TIER’s senior analyst Arisa Liu (劉佩真) said sales at Taiwanese pharmaceutical companies and hygiene product manufacturers might increase. If the situation worsens, the nation’s tourism industry and department stores would suffer, she said.
Separately, a TIER survey showed that the business climate index for the manufacturing sectors rebounded last month, reflecting positive sentiment in the electronics sector.
However, the institute’s business climate index for the service sector dropped last month because of a gloomier outlook for brokerage houses, restaurants, hotels and retailers.