Mon, Aug 16, 2010 page12

• ANALYSIS : GDP growth forecast for this year likely going up

  • By Ted Yang / STAFF REPORTER
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  The government is likely to revise upwards its GDP growth forecast for the full year because of a ­better-than-expected performance in the second quarter aided by robust exports, despite worries over economic fundamentals in the US, analysts said.

  “Our preliminary estimate is that the second quarter will see a growth of 11.2 percent, which is much higher than the government’s projection,” Cheng Cheng-mount (鄭貞茂), Citigroup Taiwan’s chief economist, said by telephone.

  The Directorate-General of Budget, Accounting and Statistics (DGBAS) forecast in May that the economy could grow 6.14 percent this year, with ­second-­quarter GDP expected to grow by 7.66 percent. Citigroup previously estimated the economy would grow 8.3 percent year-on-year in the April-to-June period.

  

  An incense and offerings vendor approaches passers-by outside a temple in Taipei yesterday. The number of families falling under the poverty lines rose to a record high of 108,000 in the three months to June despite continued growth of the economy.

  PHOTO: PATRICK LIN, AFP

  “We remain very optimistic about Taiwan’s economic growth for the full year,” Cheng said, adding that the nation would not experience a double-dip recession in the second half of the year as growth momentum still persists.

  Citigroup now projects the economy will expand 8.7 percent this year, up from its earlier forecast of 7 percent growth.

  Yang Chia-yen (楊家彥), a director at the Taiwan Institute of Economic Research (TIER, 台經院), said the US economy was still growing, while the European debt crisis had shown signs of ­stabilizing.

  He forecast the government would raise its GDP growth ­forecast to at least 6.5 percent for the full year on the back of increasing exports.

  Yang said by telephone that corporate investment in the US would start showing signs of pick-up chiefly because the financial crisis has bottomed-out and new business plans are about to unroll.

  “This will benefit Taiwan as it will further increase the nation’s export orders,” he said.

  Gordon Sun (孫明德), deputy director of the macroeconomic forecasting center at TIER, however, warned that although the second quarter may see substantial growth, local companies should remain cautious over uncertainty in global economic conditions in the second half of the year.

  “Many numbers released recently in the US have shown signs of [the economy] worsening and the Chinese economy is growing at a slower pace,” Sun said, adding that recent sharp fluctuations in the foreign exchange market would have an adverse impact on international trade.

  Even if growth in the second half might be adversely impacted by uncertainty in global economic conditions, however, there’s not much room left for downward revisions, Sun said.

  The DGBAS last predicted that the economy would grow by 4.4 percent in the third quarter and 0.69 percent in the fourth quarter.

  Nevertheless, Chiou Jiunn-rong (邱俊榮), a professor of ­economics at National Central University, said the contribution of exports to the nation’s economic growth is “shrinking” as the eurozone debt crisis remains unresolved, while domestic demand has yet to revive.

  “We can see that the economy in Europe is still in a bad shape, which makes it hard for the nation’s exports to sustain [growth] until the end of the year,” Chiou said.

  “This is reflected in the recent GDP growth revisions by local think tanks, which were not as bullish as those made earlier this year,” Chiou added.

  The Chung-hua Institution for Economic Research (中經院) remains the most optimistic about the economy among local think tanks, expecting it to grow 6.94 percent, followed by Academia Sinica (中研院) at 6.89 percent and the Polaris Research Institute (寶華綜經院) at 6.82 percent.

  The DGBAS is scheduled to release its latest GDP growth forecast on Thursday.

  For your information

  Foreign Perspective

  GDP forecasts for Taiwan and when they were made: Citigroup: 8.7% (Aug) IMF: 7.7% (July) Deutsche Bank: 7.6% (July) Economist Intelligence Unit: 7.6% (July) Asian Development Bank: 5.9% (July) Standard Chartered Bank: 5.9% (May) Goldman Sachs: 7.2% (May) Credit Suisse: 6.7% (May)

  SOURCE: TT
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