The Taiwan Research Institute (TRI, 台灣綜合研究院) yesterday raised its forecast for the nation’s GDP growth this year and expects the pace to gain modestly next year as the global economy enters an era of great moderation.
The Taipei-based think tank elevated its projection for GDP growth to 3.36 percent this year, from 3.1 percent estimated in June, as the US economy fares better, which is favorable for Taiwan’s exports, TRI president Wu Tsai-yi (吳再益) said.
The momentum eased in the second half, as GDP growth looked likely to slip to 2.7 percent, lower than the June forecast, as economic growth in China, Japan and Europe was disappointing, Wu said.
The landscape at home and abroad looks similar next year compared with this year, Wu said, adding that GDP growth might rise to 3.43 percent next year, compared with 3.8 percent for the world economy as forecast by the IMF.
Taiwan used to outperform the world economy in terms of GDP growth, but the gap has tapered off in recent years, as Taiwanese firms increasingly lose their competitive edge and the government fails to provide substantial assistance, Wu said.
Heavy reliance on electronics exports also makes the nation vulnerable to volatility in the global technology cycle, he said.
As a result, the nation is likely to show smaller GDP growth — like developed economies — in the future, in the absence of economic reform, he added.
The nation’s exports are forecast to grow 6.87 percent next year from this year, while imports might increase by 5.97 percent, the institute’s report said.
Falling international fuel prices are likely to allow consumer prices to rise only 0.85 percent annually next year, compared with an estimated 1.31 percent increase this year, the report said, adding that this trend would benefit most economies in terms of lowered production costs for companies and living expenses for consumers.
The New Taiwan dollar is predicted to trade at an average of NT$31.4 against the US dollar, compared with an average of NT$30.09 throughout this year, the report said.
There is little room for the NT dollar to appreciate in the foreseeable future, while South Korea and Japan are actively depreciating their currencies to support economic growth, Wu said.
The TRI expects the central bank to raise interest rates in the second half of next year, taking cues from its US counterpart.
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