The Taiwanese economy is forecast to expand 2.58 percent next year, following an estimated 2.62 percent growth this year, with private investment lending further support, albeit at a slower pace, Academia Sinica said yesterday.
The forecast is slightly lower than the 2.72 percent increase projected by the Directorate-General of Budget, Accounting and Statistics (DGBAS) last month.
“Indeed, we are less optimistic [than the DGBAS] because major economies around the world are slowing down, which is unfavorable to Taiwan’s exports,” Academia Sinica research fellow Ray Chou (周雨田) said.
As this year’s relatively strong economic performance would create a higher comparison base, it would be difficult for the local economy to beat that next year, Chou said.
Private investment, which picked up 7.59 percent in the first three quarters, is likely to finish the year with a 7.42 percent increase and grow at a slower 4.11 percent next year, the Taipei-based think tank said.
Taiwan should continue to benefit from order transfers and relocation of manufacturing bases, the windfall of the US-China trade dispute, Chou said.
If the two nations reach a “phase two” deal and remove tariff barriers, the global economy should stage a strong comeback and Taiwan is well positioned to benefit, the researcher said.
In addition, if Taiwanese firms operating in China continue to return and make Taiwan their long-term manufacturing and investment base, the nation would see a substantial increase in employment, domestic consumption and overall economic showing, Chou said.
In that case, GDP growth for next year could surge to 3.81 percent, Academia Sinica said.
However, if downside risks materialize, economic growth could soften to 1.47 percent, it said, adding that chances of the extreme scenarios happening are slim.
Foreign trade might come out of the woods next year, when exports and imports post gains of 2.56 percent and 2.52 percent respectively, it said.
Both readings are expected to stay in the contraction zone this year, as the trade dispute has weakened demand for commodities and services, it said.
Consumer prices are forecast to edge up 0.73 percent, while the wholesale price index is expected to decline by 1.25 percent, suggesting a tepid improvement for oil and raw material prices, it said.
The local currency is likely to trade at an average of NT$30.73 against the greenback next year, mildly stronger than this year’s estimated average of NT$30.96, it said.
Academia Sinica revised up its projection for this year’s GDP growth from 2.01 percent to 2.62 percent.
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