The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) on Friday raised its forecast for Taiwan’s GDP growth this year to 2.33 percent, due to higher-than-expected investment growth.
That was 0.27 percentage points higher than its previous forecast of 2.06 percent in July.
The institution revised its forecast, as the economy grew 2.12 percent annually in the first half of the year, which was better than its original projection of 1.7 percent, thanks to a 2.4 percent year-on-year gain in the second quarter, CIER Economic Forecasting Center director Peng Su-ling (彭素玲) told a news conference in Taipei.
Despite headwinds, including a slowdown in the global economy and uncertainty from trade tensions, the nation’s investments kept rising this year, due to local technology companies, especially in the semiconductor sector, Peng said. Also, more Taiwanese firms with overseas operations have applied to return home, she said.
CIER said it expects the growth of fixed capital formation for the whole of this year to reach an eight-year high of 6.99 percent, up from its July projection of 6.36 percent, which would lift economic growth this year by 1.45 percentage points, Peng said.
The momentum is expected to continue next year, but investment growth is forecast to decelerate to 4 percent due to a high comparison base this year, she said.
Although the nation’s exports contracted 2.5 percent annually in the first nine months, the decline narrowed to 0.79 percent in the third quarter, compared with a decline of 4.17 percent in the first quarter and 2.7 percent in the second quarter, Peng said.
Exports are likely to rebound with an annual gain of 6.02 percent in the fourth quarter, but might drop 0.33 percent for the whole of the year, she said.
In the first half, Taiwan’s economy expanded 2.12 percent year-on-year, and it is forecast to expand 2.4 percent in the third quarter and 2.64 percent this quarter, CIER said. The second half is the high season for consumer electronic devices, which should benefit Taiwanese firms’ global supply chains, it said.
For next year, the institute forecast that the economy would remain flat at 2.34 percent, as investment growth would slow.
The institute holds a conservative outlook for exports next year, as the economies of the nation’s two largest trading partners — the US and China — might lose steam.
CIER’s forecast differed from that of the Directorate-General of Budget, Accounting and Statistics, which in August predicted economic growth would accelerate from 2.46 percent this year to 2.58 percent next year once the bulk of investment pledges by returning Taiwanese firms materialize.
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