Yuanta-Polaris Research Institute (元大寶華研究院) has revised up its forecast for GDP growth this year to 2.88 percent from the 2.72 percent it estimated in December.
The figure is also higher than the Directorate-General of Budget, Accounting and Statistics’ (DGBAS) forecast of 2.82 percent made last month.
“As economic sentiment in Taiwan remains fragile, the central bank is unlikely to initiate a cycle of interest rate increases,” Yuanta-Polaris chairman and president Liang Kuo-yuan (梁國源) told a press conference yesterday.
Liang said the central bank — which is holding a board meeting today — is likely to keep its policy rates unchanged for the 11th straight quarter.
Liang added that he does not anticipate a rate hike in Taiwan unless the US Federal Reserve moves to raise its policy rates, which may not happen in the next six months.
The mild expansion in inflation could also hold back the central bank from adjusting rates, he said.
Although economic recovery in developed countries is continuing, the economic momentum in Asia — Taiwan’s major export destinations — remains sluggish, and this could result in slower trade growth compared with last year, Yuanta-Polaris said.
The institute forecast that the export of goods and services would rise 4.42 percent this year, while imports would increase 4.41 percent from a year earlier.
Private consumption is expected to grow 2.21 percent, while private investment is forecast to expand 3.81 percent year-on-year, the institute said.
The consumer price index (CPI) could rise 1.18 percent from last year, the institute said.
Liang said Taiwan’s economy is likely to face two major risks next year: uncertainty over the US Fed’s move to normalize its monetary policy and lower-than-expected economic growth in China.
Asked about the ongoing controversy and protests against the cross-strait service trade agreement with China, Liang said they would have only have a limited impact on the economy this year.
However, Taiwan needs to sign a free-trade agreement with China to sustain growth in private investment over the medium and long term, he said.
“Many investors have also expressed an interest in Taiwan serving as a hub [for access] to China,” he said.