Sat, Jul 17, 2004 - Page 1 News List

CIER revises GDP growth forecast upward to 5.35%

By Joyce Huang  /  STAFF REPORTER

With the first quarter's economic growth reaching 6.28 percent, the Chung-Hua Institution for Economic Research (CIER, 中經院) yesterday revised upward its full-year economic growth (GDP) forecast this year to 5.35 percent from the 4.67 percent predicted in April.

"The nation's real GDP is expected to break through the NT$10 trillion level, reaching NT$10.47 trillion in 2004," Chou Ji (周濟), director of CIER's Center for Economic Forecasting, told a press conference yesterday morning.

Chou expressed a bullish view about the local economy, although uncertainties still loom that could possibly cloud future development, he added.

"The nation's economic growth momentum is stable on an uptrend, although the GDP figure in the second half of the year may slightly slide down as a result of a higher base last year," Chou added.

The nation's better-than-expected export and import performance in the second quarter, which respectively grew 28.9 percent and 39.8 percent, and a pick-up in domestic demand, which contributed 5.08 percentage points to the first quarter's 6.28 percent GDP growth, is expected to bring up the nation's GDP rate in the second quarter to an estimated 6.4 percent, according to Chou.

The nation's private investment is also estimated to see positive growth of 29.15 percent in the second quarter, an estimated 21.86 percent growth in the third quarter and an estimated 15.11 percent in the fourth.

But CIER estimated that the nation's GDP figures in the third and fourth quarter may respectively decline to 4.61 percent and 4.27 percent while next year's figures may be even worse, at 4.44 percent.

Chou noted that unforeseen economic uncertainties include the likelihood of the US Federal Reserve raising interest rates, upcoming elections in both the US and here, terrorist threats surrounding the Olympic games in Athens next month, and the aftermath of China's measures to cool its over-heated economy, any of which may have a negative impact on the global and local economies.

Economic growth

* CIER's 2004 GDP growth forecast: 5.35 percent.

* CIER's previous forecast: 4.67 percent.

* The Directorate General of Accounting, Budget and Statistics forecasts 2004 GDP growth at 5.41 percent.

* Academia Sinica predicts growth of 4.35 percent this year.

* According to CIER, last year's growth measured 3.24 percent.

Source: Taipei Times

Despite the world economy appearing to have emerged from deflationary pressures, CIER president Chen Tien-jy (陳添枝) yesterday warned that inflationary pressures are inevitably on the rise with commodity prices quickly climbing.

CIER estimated that the nation's consumer price index (CPI) may hit 2.1 percent in the third quarter -- the highest since 1999 -- and fall back on 1.35 percent in the fourth quarter.

Chou, however, said that the index's fluctuation is currently in an acceptable level while the New Taiwan dollar still faces pressures to gain between NT$32.8 and NT$33 against the US greenback in the second half year.

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