The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its GDP growth forecast for the nation to 2.47 percent this year, up from the previous estimate of 2.27 percent, as exports have fared well so far on stable global economic expansion.
The growth revision is higher than the government’s February projection of 2.42 percent and came after exports grew 10.6 percent last quarter, beating the 7.4 percent forecast by the Directorate-General of Budget, Accounting and Statistics.
“Better external demand merits the upward revision, although tension is building over a trade war between the US and China,” CIER president Wu Chung-shu (吳中書) told a news conference.
It is the third time the Taipei-based think tank has raised the growth forecast for this year after exports gained fast traction last quarter, despite a slow season and a high base last year.
Outbound shipments are now expected to grow 7.62 percent and imports 8.54 percent.
The projection suggests that domestic demand is to be the main growth driver, supporting GDP growth by 1.96 percentage points from 1.03 percentage points last year, CIER researcher Peng Su-ling (彭素玲) said.
Domestic firms are likely to show more willingness to invest after international technology giants IBM Corp and Alphabet Inc’s Google announced plans to hire more employees in Taiwan to meet demand for new technologies, Peng said.
Local semiconductor suppliers have found support in demand for high-performance chips used in Internet of Things applications and cryptocurrency mining, as the market for high-end smartphones grows increasingly satiated.
Private investment might increase 2.24 percent this year, reversing a 0.89 percent decline last year, Peng said.
Private consumption would also lend a helping hand with a 1.95 percent increase from last year, the CIER report said, as the local bourse continues to stay comfortably above 10,000 points on active trading.
The TAIEX showings reflect confidence on the part of investors, who have benefited from a positive wealth effect, Wu said.
The institute expects consumer prices to pick up 1.63 percent, from a 0.62 percent increase last year, on the back of higher oil and commodity costs.
The New Taiwan dollar might trade at an average of NT$29.35 against the US currency from NT$30.44 last year, the report said.
Downside risks include trade barriers by major economies that might hurt global growth, as well as the local elections in November, Wu said.
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