With strong export momentum expected to continue into the first quarter next year, Taiwan's economy will have a better performance next year than this one, the Taiwan Institute of Economic Research (TIER,
The institute expects interest rates and exchange rates to stabilize and domestic consumption to expand.
TIER forecast last month that GDP will grown 3.96 percent next year, up from this year's estimated 3.51 percent.
"Exports and imports will be the main growth drivers next year," TIER president David Hong (
During the first 11 months of the year, the nation's trade surplus amounted to US$4.87 billion, down 32.7 percent from a year ago due to rising prices for crude oil and imported machines and equipment. But export momentum started to pick up in the third quarter this year, with exports reaching US$17.17 billion last month, up by 10.7 percent year-on-year.
Hong said that with prices of crude oil and raw materials projected to stabilize next year, in part due to China's expansion of investment, the trade surplus is expected to continue on its current upward trend.
Domestic consumption is forecast to increase, in light of the fact that the unemployment rate declined to 3.94 percent last month, the lowest since March 2001, and the core consumer price index edged up only 0.67 percent year-on-year in the period from January through last month.
As inflation remains under control, TIER expects that interest rates should stabilize or be hiked only slightly in the short term. Last week the nation's central bank raised its benchmark interest rate for the sixth straight quarter since September last year. The bank raised the rate by 0.125 percentage points, bringing its rediscount rate charged to commercial lenders to 2.25 percent.
In terms of the New Taiwan dollar's exchange rate against the US dollar, Hong forecast that it should slightly fluctuate around the current level of NT$33 as the trade surplus has improved in the second half of the year, and price hikes at home and abroad are stabilizing.
Yesterday the local currency rose NT$0.025 to trade at NT$33.107 against the greenback.
The research institute yesterday also released a survey of local manufacturers. The poll showed that 60.5 percent of the respondents felt that economic conditions last month remained at the same level as in October, up from 40.2 percent the previous month.
Opinions diverged when they were asked about the outlook for the next three to six months, which is typically a slow season in traditional sectors. Manufacturers with a positive view toward the near future rose from 21.2 percent last month to 29.8 percent, but bearish respondents also increased from 22.3 percent to 25.5 percent.
Combining the previous figures with seasonal adjustments, TIER's manufacturing climate index last month declined by 2.83 percentage points to 105.19, while the index for the service sector climbed by 2.12 percentage points to 117.55 thanks to positive trends in consumer prices, employment and domestic consumption, the report said.
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