The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for this year’s GDP growth from 0.84 percent it projected in July to 1.03 percent, citing stronger-than-expected growth momentum in the first half, which might continue through the rest of the year.
However, experts warned that the modest upward revision is no cause for relief or excitement, as the nation leans on exports by a few technology sectors, while Chinese rivals are catching up.
“Even if GDP growth exceeds the 1 percent mark, it remains fragile,” Department of Statistics Director-General Yeh Maan-tzwu (葉滿足) told a panel discussion after the Taipei-based think tank delivered its quarterly growth update.
Photo: Wang Meng-lun, Taipei Times
The economy might have grown 1.15 percent last quarter and 2.46 percent this quarter after expanding a mild 0.21 percent in the first six months, CIER researcher Peng Su-ling (彭素玲) said.
Exports — including goods and services — might make no contribution to economic growth this year, but that is still better than a previously forecast drag, Peng said, adding that external demand remains soft, although it is improving.
The 1.03 percent growth estimate is close to the 1.06 percent growth prediction by the Directorate-General of Budget, Accounting and Statistics (DGBAS) in August.
However, it still lags behind the average growth rate of 3 percent in recent years, Yeh said.
Industrial overconcentration in the electronics sector is deepening, Yeh said, adding that semiconductor manufacturers are singlehandedly driving exports and increasing capital spending.
Taiwanese chipmakers have achieved a decent increase in business this year, even though their global peers have been taking a hit from the global slowdown, Taiwan Semiconductor Industry Association (台灣半導體協會) director-general Nicky Lu (盧超群) said.
However, Yeh raised concerns over the sustainability of the uneven growth, as China, the No. 1 destination for Taiwanese exports, is grooming its own semiconductor firms, which could grow to be formidable rivals.
A paradigm shift is also taking place from an emphasis on hardware investment to software development, which is unfavorable for local manufacturers, as many supply components for global technology brands, Yeh said.
Academia Sinica economics researcher Kamhon Kan (簡錦漢) shared some of Yeh’s concerns, saying that industrial overconcentration is not an issue as long as Taiwanese firms can maintain their leadership status.
However, Beijing has unveiled a timetable to cut its dependence on exports, and Taiwan would suffer the most due to its substantial trade ties with China, Kan said.
CIER’s growth forecast of 1.81 percent for next year might prove overly optimistic, Kan added.
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