The nation’s economy may continue to be sluggish in the coming years because of weakening domestic and international demand, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday, while revising its GDP growth forecast for this year down to 1.72 percent.
In October, the Taipei-based think tank forecast that the economy would grow by 2.01 percent this year.
The institute also slashed its economic growth forecast for next year from 3.21 percent to 3.03 percent and offered a bearish long-term outlook.
“Overall, the momentum for demand in the external and domestic sectors remains insufficient,” Liu Meng-chun (劉孟俊), director of CIER’s center for economic forecasting, told a media briefing.
“We are concerned that the current downbeat sentiment toward the economy may become the norm in the long run,” Liu added.
Liu said that the recovery of the global economy has not translated into strong demand for Taiwanese-made products, which has in turn undercut growth in imports.
He said that public investment would likely remain low due to the pressure generated by the national debt ceiling, while private consumption would be dragged down by stagnating wages.
The institute’s only positive outlook was on private investment, which may grow at a rate of 4.24 percent next year, Liu added.
The institute forecast that the economy would expand faster in the second half of next year than in the first six months due to the base effect.
Annual GDP growth in the first quarter of next year could be as high as 2.38 percent, followed by a rise of 2.6 percent, 3.63 percent and 3.43 percent in the following three quarters respectively, the institute said.
Meanwhile, consumer prices are likely to increase 1.32 percent next year, following a slower growth rate of 0.85 percent this year, the institute said.