The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its GDP growth forecast for this year to 2.18 percent as exports strengthen amid a slowdown in private investment.
CIER’s previous estimate was for a growth rate of 2.14 percent.
The institute shrugged off concerns over reports that Apple Inc cut iPhone 8 orders due to slack sales, saying that iPhone X and other technology gadgets would supply growth drivers.
“The global economy remains on a stable course of recovery at mixed paces in different regions, boding well for consumer electronics sales,” CIER president Wu Chung-shu (吳中書) told a news conference in Taipei.
CIER now expects exports to raise GDP growth by 0.85 percentage points this year, nearly double the 0.47 percentage points it estimated three months ago.
Last month’s record-high exports with a rare 28.1 percent annual increase gave support to the optimistic forecast, it said.
Though iPhone 8 has failed to create much global excitement, iPhone X is designed to celebrate the device’s 10th anniversary and might prove a different story once it hits the shelves, Wu said.
Local suppliers might also have benefitted from other brands, such as HTC Corp (宏達電), Oppo Mobile Telecommunications Corp (歐珀) and Huawei Technologies Co (華為), launching their newest generation of smartphone models, he said.
However, lackluster domestic demand is likely to contribute only 1.33 percentage points to GDP growth, which has been slowed by a quick retreat in private investment, while pension reforms and labor rule changes weigh on consumer confidence, the institute said.
Private consumption is expected to grow 1.73 percent this year, down from its previous estimate of 1.87 percent, it said.
Capital formation and private investments are forecast to increase 3.28 percent and 2.31 percent respectively, compared with its earlier estimates of 2.73 percent and 2.95 percent, it said.
The government has sought to fill in the gap by implementing a special spending program to strengthen infrastructure facilities over the next four years, and the institute expects the economy to expand by 2.20 percent next year instead of the 2.15 percent growth it predicted in July.
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