Polaris Research Institute (寶華綜合經濟研究院) yesterday revised upward its forecast for Taiwan’s economic growth for the full year to 6.82 percent because of substantial growth in exports and recovering domestic demand.
That compared with its previous estimate of 4.65 percent in March and remained the most optimistic prediction among local research agencies, followed by a Taiwan Research Institute (台綜院) estimate of 5.88 percent and a Taiwan Institute of Economic Research (台經院) estimate of 5.11 percent.
Expecting the growth momentum to gradually reduce, the Taipei-based institute forecast that the economy would expand 9.51 percent in the second quarter, 5.8 percent in the third quarter and 0.24 percent in the fourth quarter.
“Imports and exports, including export orders, in April and last month were higher than expected. Unless the third and fourth quarters see an extremely bearish performance, 6.82 percent is a reasonable estimate,” Polaris president Liang Kuo-yuan (梁國源) told a media briefing.
Liang said the European debt crisis would not lead to a double-dip recession, but whether or not the global economy would complete its “V-shaped” recovery was contingent on economic growth momentum in China and the economic situation in the eurozone.
Growth of revenues in retail business in recent months has remained stable, an indication that domestic consumption is steadily recovering, Polaris said.
“The first four months of this year saw a monthly average of NT$278.6 billion [US$8.68 billion] in retail business revenues, higher than monthly averages recorded in the past three years.”
However, Liang said the nation’s unemployment rate remained high, making it unlikely that domestic consumption would see substantial growth in the short-term. For the full year, domestic consumption is likely to grow 2.05 percent and consumer prices are expected to grow 1.38 percent, the institute forecast.
Liang said that the value of the New Taiwan dollar is expected to average NT$31.6 against the greenback for the full year and NT$31.45 for the second half, adding that China’s decision to manage its currency more flexibly last weekend was factored into the prediction.
“If China hadn’t broken its currency’s peg to the dollar, our estimate of the value of the NT dollar would be NT$31.8 for the second half and for the full year,” he said.
Liang also said the central bank was unlikely to raise policy rates in its quarterly board meeting tomorrow because major economies that maintain close economic relations with Taiwan have yet to raise interest rates.
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