Yuanta-Polaris Research Institute (元大寶華綜合經濟研究院) yesterday cut its forecast for the nation’s economic growth this year to 2.47 percent, from the 3.65 percent it forecast in March, citing weak economic momentum in the first half of this year.
The institute forecast a 2.2 percent year-on-year economic expansion in the second quarter, followed by growth of 3.01 percent and 2.91 percent in the third quarter and fourth quarter respectively.
“The chances of Taiwan’s economic growth maintaining 3 percent for the whole of this year are slim,” Yuanta-Polaris president Liang Kuo-yuan (梁國源) told a press conference.
Liang’s tone was more bearish than that of Council for Economic Planning and Development (CEPD) Minister Kuan Chung-ming (管中閔), who recently said the economy could still expand 3 percent this year from last year.
Following Yuanta-Polaris’ less upbeat forecast, the central bank is likely to keep its policy interest rates unchanged at its board meeting today, the Taipei-based think tank said.
Liang was also pessimistic about the nation’s private consumption, citing stagnancy in real wages. The institute forecast private consumption might only grow 1.23 percent this year from last year.
However, rebounding exports in the second half of this year could provide some momentum to the economy, led by shipments from the semiconductor sector, he added.
Liang said he does not expect any impact on Taiwan’s economy this year from the cross-strait service trade agreement, but the pact may affect some industries longer term, either positively or a negatively.
“The government has to carry out more detailed and comprehensive analysis about how the pact will impact the nation’s industries, and disclose its findings to the public,” he told the Taipei Times.
On the consumer price front, the institute forecast that headline inflation will rise modestly at 1.26 percent this year.
In March, the institute forecast consumer prices to increase 1.53 percent this year.
However, consumer prices may rise 1.73 percent in the fourth quarter — the highest level this year — if the government raises electricity rates in October, the institute said.
Yuanta-Polaris forecast that the NT dollar will average NT$30 against the US dollar this year, from an average of NT$29.7 it estimated previously.