The nation’s economy may expand 2.9 percent next year from an estimated 1.2 percent growth this year on better exports, as major trading partners recover somewhat from the global slowdown, Morgan Stanley said in a recent report.
“We expect Taiwan’s GDP to rise 2.9 percent next year, with exports the main driver amid a better global macro economic backdrop,” Morgan Stanley economist Sharon Lam (林琰) said in the report.
The forecast came as the Directorate-General of Budget, Accounting and Statistics (DGBAS) is set to update its third-quarter GDP growth figures, and provide its forecast for the fourth quarter and next year’s growth numbers, this afternoon.
On Oct. 31, the DGBAS revised downward its GDP growth forecast for this year to 1.05 percent from the previous estimate of 1.66 percent, and expected the economy to expand by 3.09 percent next year, down from the 3.67 percent growth previously forecast.
Lam said Taiwan’s recovery would be slower than the trend growth and exports to Europe would be the main drag.
“Exports to the advanced economies, particularly the EU, may continue to underperform given the tough economic situation there,” the Hong Kong-based economist said in the report.
Exports are predicted to grow 8 percent next year, from a predicted contraction of 2.5 percent this year, the report said.
Morgan Stanley said it expected the unemployment rate to average 4.2 percent next year, unchanged from this year, while inflation is likely to ease to 1.5 percent next year, from the forecast of 1.9 percent this year, according to the report.
The US brokerage expects the central bank to raise the interest rate next year from holding the benchmark rediscount rate steady at 1.875 percent this year.