Sat, Jul 28, 2018 - Page 12 News List

Economy growing faster, but risks rising: institute

By Crystal Hsu  /  Staff reporter

Academia Sinica yesterday raised Taiwan’s GDP growth forecast for this year from 2.43 percent to 2.65 percent on the back of robust exports, but said that rising trade tensions and financial market volatility are risks to growth.

“Taiwan’s economy should remain on a course of stable expansion, but downside risks are growing,” Academia Sinica research fellow Ray Chou (周雨田) told a news conference.

The upward revision makes the Taipei-based institute the most optimistic among its peers, higher than the government’s projection of 2.6 percent growth.

Robust global demand has enabled Taiwan to achieve a better-than-expected trade volume and healthy manufacturing activity, Chou said.

Major economic gauges show that the growth momentum should be sustainable in the second half, Chou said, citing the official manufacturing purchasing managers’ index, industrial output and private consumption data.

Exports and imports are forecast to rise 4.03 percent and 4.91 percent respectively this year, as price hikes should help absorb the negative impact linked to the tariff row between the US and China, the institute said.

Exports advanced 10.9 percent annually in the first six months of the year and imports grew 10.8 percent from the same time last year, as Taiwan’s foreign trade benefitted from faster global economic growth, according to government statistics.

Taiwan is home to the world’s largest contract suppliers of critical electronic parts used in smartphones, laptops and TVs, as well as Internet of Things and artificial intelligence applications.

Consumer prices are forecast to increase 1.58 percent this year, after picking up 1.6 percent in the first six months, as the effect of cigarette tax hikes last year tapers off, Chou said.

The wholesale price index is likely to rise 2.89 percent for the full year, faster than the 2.37 percent advance in the first six months, he said.

A weaker New Taiwan dollar would translate into a higher cost burden for imported goods, he said.

The labor market has improved, with the jobless rates for the first time in six months standing at 3.66 percent and likely to average 3.7 percent this year, Chou said.

A stable job market should lend support to private consumption, which is forecast to expand 2.41 percent this year, he said.

Retail, wholesale and restaurant revenues grew 4.49 percent in the first half, aided by wage increases and a vigorous stock market, the institute said.

Private investment is forecast to increase 3.34 percent this year, as local firms become more active in capital expenditure, it said, adding that the government is helping by removing investment barriers.

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