The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for the nation’s economic growth to 2.67 percent this year, 0.21 percentage points higher than its estimate three months earlier, as progress in a US-China trade dispute allows global trade and manufacturing to regain momentum, it said.
Exports, which typically drive growth, but contracted last year, might stage a 3 percent increase this year, as firms feel more comfortable building up inventory after the US and China signed a “phase one” trade deal, the Taipei-based think tank said.
Improving corporate confidence and sustained monetary easing by global central banks should offset risks linked to a slowdown in major industries, it said.
The pickup in sentiment might shore up demand for oil and raw materials, but improvement is likely to be limited, due to a persistent supply glut, the institute said.
Private investment, which underpinned GDP growth last year, is expected to expand 4.15 percent from a year earlier, as investments in 5G and firms relocating production bases home would continue to act as a catalyst, TIER president Chang Chien-yi (張建一) said.
The government has received investment pledges of more than NT$800 billion (US$26.66 billion), which is expected to support GDP growth over the coming three years and help boost per capita income from US$28,000 to US$35,000 a year, Chang said.
The per capita figures leave Taiwan lagging behind Hong Kong, Singapore and South Korea, despite its stronger economic performance last year, the economist said.
The situation might change, as private investment, which accounted for 20 percent of GDP in 2016, gained 23.7 percent last year and might climb to 24 percent this year, Chang said.
Taiwanese firms in China would continue relocation plans no matter how the US-China trade dispute pans out, as China’s manufacturing terms have grown increasingly unfavorable, he said.
TIER predicted that consumer price rises would remain benign at 0.86 percent this year, while the wholesale price index might grow one percent, emerging from a 2.24 percent decline last year.
The local currency might trade at a stable average of NT$30.28 against the US dollar, it added.
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