Both the IMF and Barclays Capital Inc forecast that Taiwan’s economy would see growth of more than 6 percent this year, higher than the government’s estimate of 4.72 percent.
The IMF, in its latest World Economic Outlook report, said on Wednesday that with Asia leading the global economic recovery, it expected Taiwan’s GDP to grow 6.5 percent this year. The local economy contracted 1.9 percent last year.
Taiwan will have the third-strongest economic growth in the region after China’s 10 percent and India’s 8.8 percent, which the fund views as the two engines fueling the region’s economic growth.
EMERGING MARKETS
“The recovery is projected to be strongest in Asia and weakest in emerging Europe,” the report said, adding that “many advanced economies are expected to undergo more subdued recoveries than most emerging and developing economies.”
It also forecast that Taiwan’s GDP would rise 4.8 percent next year and 5 percent in 2015.
As for unemployment, the IMF expects the nation’s average jobless rate to decline from last year’s 5.9 percent to 5.4 percent this year and further to 4.9 percent in 2015.
The fund also expects the nation’s consumer price index to stabilize at 1.5 percent both this and next year before edging up to 2 percent in 2015.
Sharing a similar view, Barclays Capital projected in its Emerging Markets Quarterly that the local economy would grow 6 percent this year on rebounding demand for electronics globally and a pickup of domestic demand in China.
The bank said the local economy “continues to ride the crest of the global technology sector” following recent launches of Windows 7 and Internet-enabled mobile phones.
That has fueled a rise in the sales of PCs, flat-screen panels and memory chips, a growing proportion of which are shipped to China, it said.
The bank, moreover, said it believes the nation’s planned inking of an economic cooperation framework agreement (ECFA) with China, likely next month, will be a key catalyst for the local economy.
‘EARLY HARVEST’
It speculated that both governments wwere likely to scale down the number of products to be included in the “early harvest” agreement to around 200 — from 500 — to accelerate the talks, which it said would still be broader than the ASEAN-China 100-item early harvest package in 2002.
That will set the stage for more capital inflows — both portfolio and direct investment — mainly from the 1 million Taiwanese living and working in China, it said.
“In our view, net inflows to portfolio assets could hit US$5 billion in 2010, reversing the US$10.3 billion decline last year and cumulative net portfolio outflows between 2000 and 2009 of US$103.8 billion,” the report said.
CAUTIOUS
Minister of Economic Affairs Shih Yen-shiang (施顏祥) said yesterday the nation’s economic growth could reach 5 percent this year, judging from its performance in the first quarter.
“The better-than-expected expansion of course has something to do with the proposed economic cooperation framework agreement with China,” Shih said while fielding questions from Chinese Nationalist Party (KMT) Legislator Lee Ching-hua (李慶華) at the Legislative Yuan.
Citing Taiwan’s increased international trade and export orders, Shih said there were increasing signs that GDP could grow 5 percent this year, although the Directorate-General of Budget, Accounting and Statistics has forecast only 4.72 percent growth.
As to the IMF’s forecast of 6.5 percent growth, Shih said: “It’s not absolutely impossible, but 5 percent is a very reasonable forecast for the time being.”
ADDITIONAL REPORTING BY CNA
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