The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its economic growth forecast this year to 3.23 percent, from the 3.17 percent it estimated in January, citing better-than-expected momentum in private consumption amid a global economic recovery.
It was the second upward revision by the Taipei-based institute after it forecast in November last year that the nation’s GDP would expand 3.11 percent this year.
“The stronger-than-expected growth in private consumption was the major factor leading the institute to boost the full-year growth outlook,” Gordon Sun (孫明德), director of the institute’s economic forecasting center, told a media briefing.
The institute raised its forecast for private consumption this year to 2.51 percent, up 0.28 percentage points from its previous estimates, supported by the nation’s growing trade momentum and rising public sentiment.
The output sector and input sector may grow 3.4 percent and 3.3 percent this year respectively, with private investment expected to increase 3.45 percent from a year earlier, the institute said in its quarterly report.
Meanwhile, the latest business climate gauges for the nation’s manufacturing and service sectors both showed a month-on-month rebound for the fourth consecutive month, evidence of a bullish economic outlook, a survey by the institute showed.
The manufacturing sector’s gauge surged 0.82 points to 102.15 points last month from February, with 58.5 percent of respondents remaining upbeat about their business, up by 36.4 percentage points from a month earlier, the survey showed.
In the service sector, the business climate gauge rebounded to 99.05 points last month, up 1.04 points from February, the data showed.
However, the business climate gauge for the construction sector dropped to 89.44 points last month, down 4.98 points from the revised 94.42 points recorded in February, reflecting the government’s move to curb speculation in the nation’s property market, TIER’s report said.
The institute said government intervention may lower the average house price in Taiwan by 10 percent this year, with the central bank’s rate policy to be the other major factor to determine the property market’s development next year.
Yet the relatively weak sentiment in the housing market does not necessarily have a negative impact on the economy, the institute said.
“In our opinion, the unreasonably high property prices would rather limit the public’s consumption capability, as general salaried people have to save more money to buy a house,” Sun said
Sun added that the government’s move to lower property prices in the Greater Taipei area may, on the contrary, drive up consumption.