The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday revised down its forecast for the nation’s GDP growth this year, but said it expected the figure to remain above 2 percent as robust capital spending helps mitigate the pain of slower exports.
The institute now expects the economy to expand by 2.06 percent, down from its previous forecast of 2.15 percent.
“The nation’s economic growth might stay above the 2 percent mark, as it improves each quarter,” following a lackluster 1.7 percent increase in the first half, CIER president Chen Shi-kuan (陳思寬) said.
The second half is usually the high season for consumer electronic devices, which should benefit Taiwanese companies in their global supply chains.
Fixed investment, led by technology firms, is expected to lift GDP growth this year by 1.21 percentage points with a 6.36 percent expansion, the Taipei-based think tank said in its quarterly report.
Imports of capital equipment rose 15.7 percent in the first half, with semiconductor equipment swelling 40.28 percent in US dollar terms, the institute said.
The government and public enterprises should help boost the economy, with investments rising 10.15 percent and 7.5 percent respectively, as exports take a hit from the US-China trade dispute, it said.
Exports, normally the main growth driver, is forecast to swing to growth from this quarter, advancing by 3.13 percent and 6.03 percent in the third and fourth quarters respectively, it said.
The critical GDP component contracted 4.24 percent and 2.56 percent in the first and second quarters due to uncertainty and a seasonal slowdown.
For the full year, exports are expected to edge up 0.7 percent, while imports are forecast to rise 1.79 percent, thanks in part to Taiwanese businesses moving back from China, the institute said.
The government has received more than 80 such applications, bringing more than NT$400 billion (US$12.87 billion) in prospective investments.
More than 60 percent of Taiwanese companies maintain factories or operations in China and 60 percent have taken measures to cope with tariff hikes, CIER said, adding that nearly 19 percent are considering moving back to Taiwan.
The trade dispute topped the list of concerns among local firms, followed by currency volatility, and wild swings in global crude oil and raw material prices, it found.
Local firms have to watch out for Chinese yuan movements as it seeks to replace the US dollar in global trade, Yuanta-Polaris Research Institute (元大寶華綜經院) president Liang Kuo-yuan (梁國源) said.
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