Wed, Oct 04, 2017 - Page 12 News List

UBS raises GDP forecast

INFRASTRUCTURE SPENDING:One UBS analyst said that if the government can fully execute next year’s budget, the boost to growth could be substantial

By Ted Chen  /  Staff reporter

UBS Group AG yesterday raised its forecast for the nation’s GDP growth next year from 2 percent to 2.2 percent on expectations that the government’s spending plans will deliver moderate support for expansion.

The Executive Yuan’s proposed budget for next year, which includes a special budget for the first phase of the Forward-looking Infrastructure Development Program, projects total revenue of NT$1.897 trillion (US$62.3 billion) and total expenditures of NT$1.992 trillion over the next 12 months, which would result in an underwhelming deficit of NT$94 billion, or 1 percent of GDP, UBS economist Li Tzeng (曾立) said.

However, that deficit would still be slightly greater than the 0.9 percent of GDP this year and last year, he added.

The Forward-looking Infrastructure Development Program accounts for 0.1 percent of this year’s deficit, UBS data showed.

CRITICAL ELEMENT

“The actual support to GDP growth will critically depend on the execution of the budget,” Tzeng said, adding that budget execution from 2012 to last year significantly fell short of the original plans.

While last year’s budget projected a deficit of 0.9 percent, the actual government deficit was only 0.3 percent.

The projected budget deficit of 0.9 percent in 2015 only produced an actual deficit of 0.1 percent, due to shortcomings in execution.

“If the central government can fully execute its budget in 2018, the boost to growth could be more substantial than indicated by the budgetary numbers,” Tzeng said.

IMPROVED OUTLOOKS

UBS has revised upward its GDP growth forecasts for the US, China and Japan next year from 2.2 percent, 6.2 percent and 1.5 percent to 2.3 percent, 6.4 percent and 1.8 percent respectively, he said.

The improved outlooks for the three economies implies a diminished external headwind for Taiwan next year, he added.

UBS maintained its forecast for Taiwan’s GDP growth this year unchanged at 2.2 percent.

The Directorate-General of Budget, Accounting and Statistics forecast that the nation’s GDP would grow 2.11 percent this year and 2.27 percent next year.

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