Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday stood by its GDP growth forecast of 2.1 percent for the whole of this year, saying that the nation would continue to benefit from an improving global recovery, but that the pace would slow due to a diminishing low-base effect.
The government’s lack of clarity on cross-strait trade ties has helped contribute to the lackluster outlook, the Taipei-based think tank said.
“Like much of the rest of the world, Taiwan has approached a T-junction where growth might become increasingly untenable if it fails to improve or prosper,” Yuanta-Polaris president Liang Kuo-yuan (梁國源) told a news conference.
The academic made the warning after exports and other major growth drivers have showed signs of slowdown since the first quarter.
Local semiconductor firms have moderated their pace of capital equipment acquisitions, which might suggest less active demand for electronic components, Liang said.
Local semiconductor firms alone drive 25 percent of the nation’s exports.
The increase in exports would decelerate to 5.16 percent this year, from the 6.65 percent the institute predicted three months earlier, while private investments would drop from 6.65 percent to 2.9 percent, Liang said.
An ongoing correction in oil prices would also weigh on exports of mineral, plastic and chemical products, which saw a significant gain in sales in the first quarter, partly due to price hikes, he said.
Meanwhile, the government has refused to recognize the importance of cross-strait relations to the nation’s economy and failed to make known its stance on cross-strait trade ties, Liang said.
President Tsai Ing-wen (蔡英文) has not yet set the tone on how Taiwan should interact with China economically, Liang said.
Former president Ma Ying-jeou (馬英九) embraced an extensive opening with China, while his predecessor Chen Shui-bian (陳水扁) introduced “an active opening, effective management” approach, compared with former president Lee Teng-hui’s (李登輝) “no haste, be patient” stance, Liang said.
“Tsai should strike a balance between Ma and Chen” by cutting economic dependence on China without ignoring the Chinese market, Liang said.
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