The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its economic growth forecast for this year to 3.17 percent, from the 3.11 percent it estimated in November last year, citing rebounding external and domestic demand on the back of a global economic recovery.
The forecast by the Taipei-based think tank was the highest among domestic economic institutes, while also higher than the Directorate-General of Budget, Accounting and Statistics forecast of 2.59 percent in November last year.
“The nation’s economic expansion this year will be better than last year, with the upward revision of our forecast for GDP growth exhibiting a bullish outlook,” said Gordon Sun (孫明德), director of the institute’s economic forecasting center.
Various international economic institutes, including the IMF and IHS Global Insight, have boosted their forecasts for global economic growth this year, which may benefit exports, Sun said.
Meanwhile, the improvement of imports of capital equipment in the fourth quarter last year indicated some optimism, which may continue through this year and support domestic demand, he added.
The latest business climate gauges for the nation’s manufacturing and service sectors both showed a rebound last month from November last year, evidence of a bullish economic outlook, a TIER survey showed.
The manufacturing sector’s gauge surged 2.9 points to 98.71 last month from November last year, with 36.3 percent of respondents maintaining an upbeat outlook for their business over the next three to six months, up by 2 percentage points from a month earlier, the survey showed.
In the service sector, the climate gauge rebounded to 93.99 points last month, up 1.5 points from November last year, the data showed.
However, the rate of economic growth in major Southeast Asian markets, such as Thailand, Malaysia and Singapore, may be the major economic uncertainty, especially following the recent political crisis in Thailand, Sun said.
TIER also forecast modest growth of 1.11 percent for the nation’s headline inflation reading this year.