The Chung-Hua Institution for Economic Research (CIER, 中經院) yesterday said that it expected Taiwan’s economy to expand nearly 7 percent for the full year on better-than-expected exports and strong private investment. However, it predicted that unemployment would remain above 5 percent this year.
The Taipei-based economic institute substantially raised its GDP growth forecast for Taiwan to 6.94 percent this year from its previous estimate of 4.99 percent in April.
“Our economy had a better-than-expected performance in the first quarter … and we see that the government has been aggressively promoting incentive programs to solicit foreign investment,” Wang Lee-rong (王儷容), director of the institute’s Center for Economic Forecasting, told a media briefing.
Wang said growth could even exceed 7 percent thanks to the “early harvest” list of goods and services that will be subject to immediate tariff concessions or exemptions beginning next year as a result of the recently inked Economic Cooperation Framework Agreement (ECFA) with China.
CIER forecast that the economy would grow 10.11 percent in the second quarter of this year, 4.48 percent in the third quarter and 1.36 percent in the final quarter, momentum slowing toward the end of the year because of the base effect.
Domestic investment is expected to increase 15.79 percent for the full year, its highest level since 1992, with private investment expanding 22 percent, compared with a contraction of 19.38 percent last year.
Unemployment will likely average 5.23 percent in the second half of the year and 5.34 percent for the full year, CIER said.
Wang said that with closer cross-strait ties and the government’s various initiatives to attract foreign investment, the jobless rate could average 4.81 percent next year
The consumer price index is likely to rise 1.52 percent this year, compared with the previous estimate of 1.71 percent in April, while the wholesale price index is likely grow 5.98 percent.
The New Taiwan dollar is expected to average around NT$31.51 against the US dollar for the full year, compared with NT$33.06 last year.
CIER said that the European debt crisis has yet to be resolved, adding that the potential fallout could still derail the recovering global economy.
The agency predicted Taiwan’s economy would expand 4.83 percent next year, with moderate inflation of 1.51 percent.
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