The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year to 3.49 percent, citing a steadily improving global economy after the US averted its “fiscal cliff” disaster.
The latest forecast was up from the 3.42 percent annual growth the institute forecast in November last year.
However, the Taipei-based think tank also raised its forecast for the nation’s headline rate of inflation for this year to 1.53 percent, from 1.34 percent, over fears that Japan’s quantitative easing could increase consumer price uncertainty.
“The pace of recovery this year will be better than that of last year in light of an upturn in trading momentum,” TIER president David Hong (洪德生) told a media briefing.
Export levels are expected to grow 4.36 percent this year amid a global economic recovery, with imports up 2.99 percent, the institute said in its quarterly report.
A rise of 4.43 percent in private investment could be one of the major driving forces for the economy’s recovery, the report said.
Private consumption is forecast to grow at a lukewarm annual pace of 2.41 percent, as rising consumer prices are expected to take their toll, the institute said.
The nation’s GDP growth might peak in the third quarter of the year, which is usually a strong season for local exporters, TIER said.
GDP could expand 3.39 percent in the current quarter from a year earlier, followed by annual growth of 3.51 percent next quarter, 3.61 percent in the third quarter and 3.44 percent in the final quarter, the report projected.
The upturn in business climate gauges for domestic manufacturing and the service sector last month were also in line with expectations.
TIER’s latest survey shows that the business climate gauge for the manufacturing sector rose to 94.22 points last month, up 3.81 from a revised 90.41 in November last year, marking the second consecutive month of improvements.
The climate gauge for the service sector also rose for the second straight month to 93.32 points, up 6.57 from 86.75 in November last year, backed by companies’ expectations of stronger seasonal demand before the Lunar New Year, the institute said.
Gordon Sun (孫明德), director of the institute’s economic forecasting center, said more than 30 percent of respondents to surveys conducted in the past two months were bullish over business prospects for the next six months, signifying an improving economic sentiment in the near future.