The Taiwan Institute of Economic Research (TIER) yesterday downgraded its forecast for the nation’s annual GDP growth to 1.93 percent from the 2.52 percent it forecast in July, citing declining exports and low private investment.
The institute forecast that exports and imports this year will report a 0.94 percent increase and 0.87 percent decline respectively, down from the 3.93 percent and 1.74 percent growth it forecast in July.
“Taiwan was heavily affected by the global economy,” Gordon Sun (孫明德), director of the institute’s economic forecasting center, told reporters, adding that major economies — the US, Europe and China — were not as healthy as expected.
Although the employment rate in the US kept rising, the country is still plagued by disputes over its debt ceiling and the upcoming tapering of the US Federal Reserve’s quantitative easing policy, Sun said.
The European debt crisis remains an uncertainty, and the new leaders in China did not propose a stimulus policy as expected, Sun said.
Expected growth of private investment was also downgraded to 4.54 percent from the 5.83 it previously forecast as private investment was high in the first quarter, but became flat later this year, the institute said.
Commenting on the adulterated oil scandals, Sun said oil consumption accounts for a small proportion of private consumption, but the influence will be more drastic if consumers spend less money dining out.
Meanwhile, the institute forecast the nation’s GDP growth would be 3.11 percent next year.
Major economic organizations forecast the global economy would increase about 0.7 percent next year compared with this year, indicating a higher trade volume for Taiwan next year, Sun said.
However, Sun said private investment would remain flat next year as companies in the semiconductor and electronics industries, which have contributed the most to private investment this year, are not likely to invest the same amount next year.
Sun said growth during the first quarter next year would be the lowest of the year as the US is set to resolve its debt ceiling dispute at that time.