The nation’s GDP is to grow 1.68 percent annually next year, but the economy will face challenges from the US Federal Reserve’s monetary tightening and a potential hard landing in the Chinese economy, Academia Sinica said yesterday.
“We are seeing signs of an improvement in the second half of this year,” Academia Sinica research fellow Ray Chou (周雨田) told a media briefing. “The global economy will improve next year, but the momentum will not be resilient, as global trade is unlikely to return to a high growth rate, which will impinge on Taiwan’s trade and economic growth as well. A low growth rate will be the new norm.”
Academia Sinica director Kamhon Kan (簡錦漢) said there is a rocky road ahead and several “black swans” are poised to shake the world economy next year.
This year, the nation’s economy is to grow at an annual rate of 1.23 percent, Academia Sinica forecast, an upward revision from the 0.52 percent annual expansion it estimated in June.
The institute attributed the upgrade to stronger-than-expected sales of Apple Inc’s iPhones, which helped boost the nation’s semiconductor companies’ growth in the third quarter.
However, Chou warned that continuing interest rate increases in the US would put greater pressure on emerging-market currencies, reducing their purchasing power and hence the demand for electronic products.
Furthermore, the rising prospect of China suffering an economic hard landing and its shift toward domestic consumption, as well as US president-elect Donald Trump’s protectionist stance, could affect demand for Taiwanese goods, he added.
Academia Sinica forecast the nation’s exports would increase 4.13 percent year-on-year next year, faster than this year’s 1.18 percent, while private consumption could rise 1.68 percent, slightly up from 1.23 percent this year.
In August, the government announced a stimulus package to spur growth.
It plans to accelerate public investment next year to NT$340 billion, including infrastructure construction and short-term investments by state-run companies. Originally, the government earmarked about NT$200 billion for public investment.
The stimulus package might add 0.3 percentage points to the nation’s GDP and lead to economic growth of nearly 2 percent next year, Chou said.
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