Economic growth in Taiwan is expected to decelerate through January next year, but at a slower pace due to support from increasing business investment, the Commerce Development Research Institute (CDRI, 商業發展研究院) said yesterday, citing its report on the business cycle forecast for the nation’s service sector.
Of the six factors in the institute’s composite index for the service sector, real GDP for transportation and warehousing, net rate of employment and first-time unemployment benefit claims have continued to worsen, while the sector’s trade deficit has improved and fixed capital formation is moving upward, CDRI said in the report.
Rising fixed capital formation suggests that increasing investments from Taiwanese companies returning home amid the US-China trade dispute are having a significant effect, the Taipei-based institute said.
The coincident composite index for the service sector, which reflects the current business cycle, it is still trending downward, but the pace has slowed, the institute said.
The service sector, which accounts for 70 percent of employment in Taiwan, had a compound annual growth rate of 2.66 percent from 2000 to last year, compared with the manufacturing industry’s 5.06 percent, CDRI data showed.
“The nation needs to put more effort into rebuilding its service sector, and focus on issues of unemployment and low wages,” CDRI chairman Hsu Tain-tsair (許添財) told a news conference in Taipei.
“Conventional approaches, such as expansionary fiscal and monetary policies, have had limited effect” in improving the service sector, Hsu said.
“We need value-driven digital transformation policies, such as precision marketing and intelligent logistics, to address issues of a small domestic market and weak purchasing power,” he said.
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