Electricity prices and the US Federal Reserve’s timing on a rate hike policy might be the major uncertainties for the nation’s economy next year, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
Liu Meng-chun (劉孟俊), director of the institute’s Center for Economic Forecasting, said tight electricity supplies could be one of the largest uncertainties for the economy in the second half of this year and next year.
Due to public opposition, the government has delayed renovating coal-fired power plants, which has constrained electricity supplies and, with the supply gap, is expected to deteriorate further over the summer, Liu said.
The US central bank might raise its policy rates by the end of this year, which would be six months earlier than the market expects, he said.
Other economic uncertainties include global crude oil supplies in relation to geopolitics issues, the slowdowns in emerging Asian economies and China, and the increased competition between Taiwanese and Chinese industries, he added.
The warning came as the Taipei-based think tank revised its forecast for Taiwan’s GDP growth this year from the 3.05 percent it predicted three months ago to 3.15 percent.
“The nation’s economic growth this year will be able to rise above the 3 percent level, driven mainly by a lower comparison basis last year and the mild recovery of both external and domestic demand,” institute president Wu Chung-shu (吳中書) told a press conference.
The institute forecast a 3.67 percent annual increase in goods and services export this year, with goods and services import sector expected to show an increase of 2.93 percent.
In terms of domestic demand, private consumption might exhibit a mild 2.03 percent expansion this year, while private investment sector is set to rise 3.58 percent year-on-year, the institute said in its quarterly report.
It forecast a 3.2 percent growth in Taiwan’s GDP growth next year, an indication that growing momentum for Taiwan’s economy might continue on the back of global economic recovery.
The institute also forecast a 1.52 percent growth in the consumer price index (CPI) this year, followed by a 1.64 percent expansion next year, mainly in line with forecast by other domestic and global think tanks.
It expects the jobless rate to average 3.98 percent this year, with the average unemployment rate next year slipping to 3.9 percent, the report said.
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