The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday said that it has upgraded its forecast of Taiwan’s GDP growth for this year, as the global economy is on track toward recovery.
The institute raised its GDP growth forecast for this year 0.11 percentage points from a January estimate to 2.45 percent.
It joined a growing list of think tanks that have upgraded their GDP growth forecasts in line with the government.
TIER appeared to be slightly more upbeat than the Directorate-General of Budget, Accounting and Statistics, which in February increased its forecast of GDP growth for this year 0.13 percentage points to 2.42 percent.
Taiwan’s export performance in the first quarter of this year was better than expected, TIER said, citing solid global demand for new tech applications, as well as an increase in international crude oil prices.
The institute raised its forecast for export sales growth to 3.83 percent, up 0.17 percentage points from an earlier forecast, and upgraded its forecast for import growth 0.17 percentage points to 3.92 percent.
As many Taiwanese firms have become more willing to invest to tap growing global demand, TIER also raised its forecast for capital formation growth 0.49 percentage points to 3.76 percent and its forecast of Taiwan’s private investment 0.5 percentage points to 2.8 percent.
It also raised its forecast for private consumption 0.04 percentage points to 2.16 percent, saying that a booming stock market has encouraged consumers to spend more.
Taiwan faces higher inflationary pressure, as commodity prices on the international market have been on the rise, pushing up domestic product prices so that the consumer price index for this year is expected to increase 1.34 percent, up 0.31 percentage points from an earlier estimate, TIER said.
While the think tank upgraded its GDP growth forecast, TIER Economic Forecasting Center director Gordon Sun (孫明德) said he remains cautious, citing increasing uncertainty.
On top of uncertainty, trade friction between the US and China, the world’s two largest economies, is likely to affect global demand, which in turn might drag down Taiwan’s exports, Sun said.
Taiwanese investors operating in China are likely to become more willing to relocate their investments back to Taiwan, or even the US, to dampen the effects of the trade dispute between Washington and Beijing, he added.
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