Thu, Dec 25, 2014 - Page 13 News List

Think tank cuts back forecast for GDP

OIL SPILLOVER:Plunging crude oil prices, while favorable to consumer spending have impacted petrochemical firms, which account for 20% of the nation’s exports

By Crystal Hsu  /  Staff reporter

Yuanta-Polaris Research Institute (元大寶華研究院) yesterday trimmed its forecast for the nation’s GDP growth this year to 3.47 percent, from the 3.57 percent it estimated in September, as free-falling oil prices dampen non-electronic exports.

The Taipei-based think tank also slashed its growth projection for next year from 3.49 percent to 3.45 percent, as demand for next-generation handsets might remain strong, but their growth will likely flatten.

“We consider it well-advised to cut our growth forecast to reflect heightening uncertainty” caused by sharp crude oil price declines and economic slowdowns in emerging markets — especially China — institute chairman Liang Kuo-yuan (梁國源) told a quarterly news conference.

Lower fuel costs, while favorable for consumer spending, bode ill for exports of petrochemical products, which account for 20 percent of the nation’s outbound shipments, Liang said.

The electronics sector has emerged as the major beneficiaries as the uneven global recovery pans out, the economist said.

The sustained US recovery might bring more orders for local companies in the supply chain of Apple Inc and China’s Xiaomi Corp (小米) going forward, while South Korea’s Samsung Electronics Co is losing market share, Liang said.

Shipments for Apple’s iPhone 6 smartphones might continue to grow, but the increase might slow next year, Yuanta-Polaris said, citing international technology research bodies.

Replacement demand for personal computers is likely to decline next year, as consumers shift preferences to other devices, Liang said.

Instead, business opportunities linked to wearable devices and the Internet of Things might start to accelerate for local electronics component suppliers beginning next year, the economist said.

Exports are forecast to grow by 5.28 percent next year, down from an estimate of 6 percent growth this year, the Yuanta-Polaris report showed.

Private investment might increase 4.1 percent next year, down from a projected 4.11 percent pickup this year, the report said, as firms show guarded optimism about their business outlook.

The think tank cut its inflation forecast to 1.18 percent for this year and to 0.75 percent for next year, the report showed.

The sharp oil price declines could persist next year and build economic crisis pressures in fuel-producing countries and on the petrochemical industry, the report said.

Japan and Europe may continue quantitative easing to spur economic growth, which would shore up the US dollar and raise default risks for nations with heavy foreign debts, the report added.

The New Taiwan dollar is expected to trade at an average of NT$31.9 against the US dollar next year, much lower than a September forecast of NT$30.2.

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