Thu, Sep 26, 2013 - Page 13 News List

Central bank likely to hold rate: Yuanta

‘FRAGILE RECOVERY’:The think tank also cut its GDP growth forecast for this year to 2.38 percent and predicted growth of 3.45 percent next year as exports pick up

By Amy Su  /  Staff reporter

The central bank may keep its policy rate unchanged for the ninth straight quarter at its board meeting today amid a still fragile global economic recovery, Yuanta-Polaris Research Institute (元大寶華綜合經濟研究院) said yesterday.

The Taipei-based think tank made the remark after cutting its forecast for economic growth this year to 2.38 percent, from the 2.47 percent it estimated in June.

“Although the global economy is recovering, the momentum remains fragile, not strong enough,” Yuanta-Polaris president Liang Kuo-yuan (梁國源) told a press conference, citing previous comments by IMF managing director Christine Lagarde.

Under the current economic situation, the central bank may opt to keep its policy rates unchanged until major global economies, such as the US and the EU, start to adjust their monetary policy, Liang said.

Yuanta-Polaris expects the nation’s economy to expand 3.28 percent year-on-year in the third quarter and 3.59 percent in the fourth quarter.

It also released its first economic forecast for next year, which it put at 3.45 percent, as exports grow on the back of the global recovery.

Despite a mild pick-up in GDP growth next year, Liang said Taiwan’s economy is facing some structural problems, which may be challenging to solve in the short term. These includes stagnant wages and sluggish investment — factors that could hurt domestic demand, he said.

Private consumption is forecast to rise only 1.17 percent this year from last year, while private investment is expected to climb 4.66 percent partly due to a low comparison base last year, the institute said.

Yuanta-Polaris also expects the output sector and input sector to grow 4.78 percent and 3.84 percent respectively this year.

As for consumer prices, the institute cut its inflation forecast for this year to 1.09 percent, down from the 1.26 percent it estimated in June.

The government’s plan to raise electricity rates from Tuesday may exert pressure on prices during the final quarter of the year, but this could also dampen demand and limit the rise in prices, Liang said.

Yuanta-Polaris forecast inflation of 1.58 percent in the fourth quarter, following a mild 0.18 percent year-on-year expansion in the July-to-September period.

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