Taiwan’s GDP is forecast to grow 3.05 percent this year, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The figure is slightly higher than the 3.03 percent forecast the institute made in December last year and much higher than the 2.82 percent predicted by the Directorate-General of Budget, Accounting and Statistics in February.
The institute forecast a 2.89 percent growth in GDP this quarter from a year earlier, followed by 3.26 percent and 3.03 percent expansions in the following two quarters respectively.
“The pace of global economic recovery has been faster than our expectations, making the institute raise the outlook for the nation’s exports,” institute president Wu Chung-shu (吳中書) told a press conference in Taipei.
However, global and domestic uncertainties remain the major risks for the economy this year, Wu said, citing the conflict between Russia and Ukraine, China’s economic adjustments, the pace of the US’ quantitative easing (QE) exit, Japan’s recent sales tax increase, and the cross-strait service trade agreement dispute.
Wu said controversies over the trade agreement may affect the nation’s investment environment in the long term, but over the near term, the export sector is likely to remains the major growth driver.
The institute forecast a 3.36 percent annual increase in exports this year, while it believes imports will increase by 3.12 percent.
In terms of domestic demand, private consumption may show a mild 1.93 percent expansion this year, while private investment is set to surge 4.55 percent year-on-year, the institute said.
In addition to the improving global economy, trade agreements with Singapore and New Zealand could have a positive impact on the nation’s exports and help raise GDP growth this year, said Liu Meng-chun (劉孟俊), director of the institute’s Center for Economic Forecasting.
Growth momentum could improve next year, with GDP likely expanding 3.16 percent from this year, he said.
The institute said the pace of inflation in remains reasonable and the headline inflation reading may increase 1.3 percent this year, followed by an expansion of 1.43 percent next year.
“Many countries welcome a mild growth in consumer prices,” Wu said.
Taiwan should also accept a modest expansion in inflation, he added.