Taiwan’s economy is expected to expand 4.12 percent next year, down from the 8.91 percent growth forecast this year, due to slower-than-expected global growth, the Taiwan Institute of Economic Research (TIER, 台經院) told an economic forum yesterday.
The Taipei-based think tank warned that the weakening US dollar may add to inflationary pressure over the next year, with the consumer price index likely to rise 2.04 percent, higher than the 1.32 percent forecast for this year.
“The US dollar is the main currency adopted by the international community. If it continues to depreciate, it will cause global raw material prices to rise and thus impact on the nation’s consumer prices,” TIER president David Hong (洪德生) said.
TIER remained the most bearish about next year’s economy among local think tanks, with its prediction lower than the government’s estimate of 4.59 percent and the Chung-Hua Institution for Economic Research’s (中經院) forecast of 4.64 percent.
IMBALANCED RECOVERY
However, the think tank attributed next year’s slower GPD growth partly to the higher comparison base this year, although an imbalanced global recovery and the US’ second round of quantitative easing may weigh on the nation’s economic growth.
“China’s economy is starting to show signs of slowdown. As Taiwan’s exports to the world’s second-largest market account for 40 percent of the total, the nation’s economy will definitely be affected,” Gordon Sun (孫明德), deputy director of TIER’s forecasting center, said on the sidelines of the forum yesterday.
Citing data by the Economic Intelligence Unit, Sun said that next year’s global trade growth would fall to 5.7 percent, almost half the 11.5 percent predicted for this year.
“This will reflect on the performance of exports and imports next year,” he said.
TIER predicted that exports will likely grow 6.4 percent next year, down from this year’s estimated growth of 31.32 percent, while imports will increase 6.89 percent year-on-year, compared with 37.66 percent projected for this year.
Meanwhile, the New Taiwan dollar is expected to average NT$30.93 against the greenback next year, up from NT$31.63 this year, TIER said, adding that the central bank will continue to maintain “dynamic stability” of the foreign exchange rate.
PRESSURE
“But in the short term, the US dollar looks set to trend down, with the local currency being under appreciation pressure,” Hong said.
Nevertheless, TIER predicted that Taiwan’s economy will expand 8.91 percent this year, higher than the government’s estimate of 8. 24 percent, on better-than-expected domestic consumption.
“Between January and September, retail, wholesale and food and beverage businesses posted impressive performance — 10.8 percent from a year ago,” Hong said.
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