Strong post-SARS rebound pushes up GDP forecast

The government yesterday raised its economic growth forecast for this year on hopes of an economic recovery in the second half of this year.

Following quarterly meeting yesterday to discuss economic conditions, the Directorate General of Budget, Accounting and Statistics (DGBAS) revised upward its GDP growth forecast to 3.06 percent from the original 2.89 percent it estimated in May.

The government statistics agency in May cut its economic forecast to 2.89 percent from a February estimate of 3.68 percent after taking the effects of the SARS epidemic into account.

DGBAS attributed the upward revision to the fact that domestic consumption recovered rapidly in June after the SARS outbreak was contained.

"Since the second half of June, SARS has been contained and demand at home and overseas is recovering," Hale Liu (劉三琦), head of the DGBAS, said at a news conference.

With rising overseas demand, local economic companies' fundamentals are expected to improve in the second half of the year, Liu said.

During the second quarter SARS claimed 84 lives from 671 infections in the nation, the third worst-hit area after China and Hong Kong.

During the second quarter, exports only grew 3.7 percent, about a third of the pace in the first three months of this year. But Liu said exports are expected to rise 7.1 percent from a year earlier, compared with the 7.0 percent it estimated in May. Imports may grow 5.1 percent, compared with 5.6 percent previously forecast, he said.

DGBAS its private investment growth forecast for the year to 1.6 percent from 5 percent previously and predicts the consumer price index may fall 0.09 percent year-on-year, compared with a May estimate of a 0.06 percent decline.