Research institute lowers forecast for GDP growth

The Taiwan Institute of Economic Research (台灣經濟研究院) lowered its forecast yesterday for Taiwan's gross domestic product growth in 2001 to 4.75 percent from 5.69 percent made in late January.

The institute forecast 4.75 percent growth for this year compared favorably with a revised forecast of 4.57 percent growth made by the Chung-Hua Institution for Economic Research (中華經濟研究院) made last week.

An indication of the slowing in Taiwan's economy came from the island's stocked market which ended 1.3 percent lower yesterday in thin trading.

"The market's facing various uncertain factors, which is keeping investors sidelined," said Anita Chen, a broker at Grand Cathay Securities Corp (大華證券). Chen noted that investors are concerned about the recent pullback in US stocks after the previous rebound in shares there.

The think-tank lowered its forecast growth in private consumption this year to 4.54 percent from a previous prediction of 5.84 percent due to a weak stock market, slowing growth in income due to a dull economy, an expected rise in unemployment and a lack of consumer confidence.

The institute predicted that private investment growth this year would be only 2.32 percent, against a forecast of 6.38 percent made in January.

Exports of goods and services in 2001 is seen up 2.93 percent, while imports of goods and services is predicted rising 1.98 percent, both significantly below previous forecasts.

The institute attributed the slowing figures on a slowdown in industrial output and a sharp slide in international trade.

Consumer prices are seen rising 1.05 percent in 2001, against a 1.97 percent prediction made in January.

Taiwan Institute of Economic Research expects an average the US dollar level of NT$32.37 for 2001.

The think-tank predicted the average overnight this year would be 4.34 percent, with a gradual rebound in the rate in the second half of the year as the economy takes a turn for the better.

Meanwhile, Taiwan's unemployment rate in April already exceeds 4 percent and is likely to continue to rise before it peaks in August, Chen Po-chih (陳博志), chairman of the Council for Economic Planning and Development, told lawmakers yesterday.

"The graduation of students in June will further exacerbate the unemployment problem," Chen said. But he stressed that, "based on the current economic cycles and the government measures to control the structural unemployment, [I] hope that the problem could be under control and the jobless rate won't exceed 4.5 percent."

While the jobless rate has been rising as the island's economy slows, Chen said the situation won't continuously deteriorate in that more domestic companies have gained their confidence in future business development. "Optimistically, the average unemployment rate for the year won't hit 4 percent," Chen expects.

The Directorate General of Budget, Accounting and Statistics (主計處) reported Monday that Taiwan's jobless rate in March had risen to a 15-year high of 3.89 percent from 3.73 in February, without adjusting for seasonal factors.