The Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday cut its economic growth forecast for this year to 0.9 percent from the 1.42 percent it predicted three months earlier.
“The nation’s three growth engines — exports, private investment and private consumption — remain mired in slowdown, meriting a downward growth revision,” although the figure might climb quarter by quarter this year, Yuanta-Polaris chairman Liang Kuo-yuan (梁國源) told a news conference.
The Taipei-based institute expects the economy to grow by 0.21 percent this quarter, ending three consecutive quarters of downturn, while expecting it to grow by 1.82 percent next quarter and by 2.12 percent in the fourth quarter.
The pace of increase, if true, would not be fast enough to drive annual GDP above the 1 percent mark, Liang said.
“Growth momentum matters more than the numerical points,” he said, adding that he has not seen any positive sign except for healthy semiconductor book-to-bill ratios.
While major semiconductor firms, such as Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電), have increased their capital spending this year, most other manufacturers have turned conservative amid declining revenues, Liang said.
Yuanta-Polaris forecast that private investment might grow by only 1.54 percent this year, compared with a 1.69 percent increase in its previous forecast, because domestic developers and builders have avoided launching new projects this year for fear of a supply glut, Liang said.
However, higher demand for chips and electronic components is expected to drive exports to grow by a mild 0.56 percent this year, compared with the previous estimate of a 0.42 contraction, Yuanta-Polaris said.
The institute trimmed its growth forecast for private consumption from 1.92 percent to 1.64 percent this year on concerns that a soft business outlook might lead companies to refrain from raising wages and hiring new staff.
As for the central bank’s quarterly board meeting on Thursday next week, Liang said he expects the bank to cut interest rates by another 12.5 basis points to spur investment demand.
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