Mon, Nov 05, 2001 - Page 1 News List

Think tank sees severe downturn


According to an economic think tank, the nation's economy may contract by 1.79 percent this year -- a downturn far more severe than government number crunchers expect, local Chinese-language media reported over the weekend.

Still, the Taiwan Institute of Economic Research (TIER) expects the economy to expand 1.95 percent next year.

Hong Teh-sheng (洪德生), vice president of the think tank, revealed the institute's preliminary figures during a radio interview with Lee Kao-chao (李高朝), vice chairman of the Council for Economic Planning and Development.

TIER is scheduled to formally announce its figures on Nov. 16.

The private institute's number is worse than previous growth forecasts made by other think tanks.

Late last month, the Chung-Hua Institute for Economic Research said it expected GDP to contract by 1.76 percent this year. The institution predicted next year's GDP growth will clock in at 2.13 percent.

Both institutes revised downward their forecasts on expectations that the Sept. 11 terrorist attacks on the US would have a negative impact on Taiwan's economy.

During the radio broadcast, Hong said he believes Taiwan's economy should start to recover early next year, forecasting growth rates of 1.75 percent in the first quarter, 1.85 percent in the second, 2.85 percent in the third and 1.44 percent in the last quarter of next year.

That compares with predictions by both Chung-Hua as well as the Council for Economic Planning and Development that the country will see a recovery in the second quarter of next year at the earliest, though neither rules out a turnaround being delayed until the third quarter.

TIER's negative-growth forecast for this year compares with the prediction of a 0.37 percent contraction made by the Directorate General of Budget, Accounting and Statistics in July.

2001 GDP forecasts

* Taiwan Institute of Economic Research: -1.79% (preliminary figure)

* Chung-Hua Institute for Economic Research: -1.76% (forecast in October)

* Academia Sinica: 2.38% (July)

* Directorate General of Budget, Accounting and Statistics: -0.37% (August)

* Citigroup: -2.6% (October)

* Merrill Lynch: -2.2% (October)

* World Bank: -0.6% (October)

compiled from reports

Last year, the country's economy expanded a healthy 6 percent.

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