The economy may grow less than 3 percent next year, as private consumption and investment remain weak, the Taiwan Research Institute (TRI, 台灣綜合研究院) said yesterday.
The institute forecast 2.81 percent GDP growth for Taiwan next year, which is higher than the 2.59 percent estimated by the Directorate-General of Budget, Accounting and Statistics (DGBAS) last month.
On Monday, the Council for Economic Planning and Development (CEPD) set a GDP growth target of 3.2 percent for next year.
For this year, the institute cut its forecast to 1.77 percent from the 2.14 percent it estimated in June.
“We think it will be difficult for Taiwan’s economy to stage a significant rebound, due to the sluggish momentum of both external and domestic demand,” TRI president Wu Tsai-yi (吳再益) told a conference.
Wu said the nation’s GDP growth has been declining in pace since 1987.
The figure reached its peak level of 8.33 percent from 1987 to 1991, but has slowed to an average of 3.33 percent for the past two years, the institute said in its half-year report.
Global economic uncertainties, as well as various domestic issues like food safety and wage stagnancy, are expected to further drag down domestic demand momentum, Wu added.
Goods and service exports volume may expand 4.17 percent next year, with private consumption and private investment expected to post growth of 1.82 percent and 5.02 percent respectively, the report said.
Meanwhile, Bank of America Merrill Lynch yesterday forecast Taiwan’s GDP would grow 2.9 percent next year.
The forecast is higher than the US bank’s estimate of 2 percent growth for Taiwan this year, but lower than the country’s long-term economic growth forecast of about 4 percent, Hong Kong-based Merrill Lynch economist Marcella Chow (周奐彤) said.
Despite these economic uncertainties, Taiwan Academy of Banking and Finance (台灣金融研訓院) president Cheng Cheng-mount (鄭貞茂), who also attended the conference, said the central bank may not change its policy interest rates in the short run.
The bank is set to hold its next board meeting on Thursday next week.
“Stable growth in consumer prices in Taiwan may lead the central bank to maintain its rates,” Cheng said.
The headline inflation reading may rise 1.24 percent next year, following from the mild growth of 0.99 percent recorded this year, according to TRI’s data.
Additional reporting by CNA