The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday cut its forecast for Taiwan’s economic growth this year to 2.01 percent from the 2.28 percent it estimated in July, citing lower-than-expected economic momentum in the second half of the year.
The Taipei-based institute’s forecast was the lowest among all domestic think tanks and also lower than the 2.31 percent expansion forecast by the Directorate-General of Budget, Accounting and Statistics (DGBAS) in August.
CIER president Wu Chung-shu (吳中書) attributed the downward revision to slower-than-expected recovery in the global economy, which dragged down exports.
“The US fiscal issue has been bothering the global economy and slowing demand, while growth momentum in China is still weak,” Wu told a press conference.
With recent political disputes at home negatively affecting domestic consumption and investment, the institute forecast that the economy would grow 2.08 percent year-on-year in the third quarter and 1.86 percent this quarter.
Exports are expected to rise 1.96 percent this year from last year, with private consumption and private investment set to grow 1.37 percent and 4.88 percent year-on-year respectively.
GDP may grow 3.21 percent next year, while consumer prices may expand 1.66 percent after an estimated increase of 0.96 percent this year, the institute said.
Academia Sinica economic research fellow Ray Chou (周雨田), who was invited to participate in the institute’s press conference, said this year’s GDP could grow by less than 2 percent in the worst-case scenario — if the US defaults on its debt, if the US Federal Reserve starts its quantitative easing exit or if China’s economy slows down.
However, Taipei-based Standard Chartered Bank Taiwan Ltd (渣打銀行) economist Tony Phoo (符銘財), also a participant at the press conference, said he remains optimistic that Taiwan’s GDP could grow more than 2 percent this year, and possibly reach 3 percent, although consumer prices may climb next year after the government increases electricity rate rates this month.