The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its economic growth forecast for the nation this year to 2.34 percent, up slightly from its November last year estimate of 2.3 percent.
Many international institutions, including the World Bank, Global Insight and the IMF, expect global economic growth this year to be better than last year, which should allow Taiwan to continue its growth momentum, Gordon Sun (孫明德), director of the institute’s Economic Forecasting Center, said at a news conference in Taipei.
However, there are still some uncertain factors that could affect economic development at home and abroad, including new policies rolled out by the US and Chinese governments, major economies’ monetary policies, and volatile crude oil and raw material prices, Sun said.
The US administration’s monetary easing and tax cuts are likely to attract investments and cash flow to the US, while China’s crackdown on pollution by intensifying environmental checks might drive up petrochemical prices and business operating costs, he said.
In addition, the US’ decision to impose heavy tariffs on imported solar equipment and washing machines could have some impact on Taiwanese makers of solar cells and modules, Sun said.
If a trade war were to erupt between the US and China, Taiwan — an important trade partner of the world’s two biggest economies — could become embroiled in it.
Meanwhile, the research institute expects the New Taiwan dollar to trade at an average of NT$29.8 against the US dollar this quarter and NT$30.1 for the full year, although the local currency is nearing the NT$29 mark, a five-year high.
The NT dollar closed NT$0.233, or 0.8 percent, higher at NT$29.069 in Taipei trading yesterday, central bank data showed.
The US dollar took another beating yesterday after US Secretary of the Treasury Steven Mnuchin said that “a weaker [US] dollar is good” for US trade at the annual World Economic Forum in Davos, Switzerland.
Mnuchin’s comments sent the greenback, which was already under pressure, tumbling, with analysts suggesting it could be a part of US President Donald Trump’s “America first” policy to help US exporters.
The TIER forecast that the NT dollar would maintain its rising trend at least until the Lunar New Year, which falls on Feb. 16.
Additional reporting by AFP
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