Taiwan’s economy is likely to expand 5.71 percent this year from last year on the back of strong private consumption, the Taiwan Institute of Economic Research (TIER, 台經院) forecast yesterday, marking the most promising forecast made among domestic think tanks.
The nation’s real GDP is expected to grow to NT$14.96 trillion (US$514.4 billion), up from an estimated NT$14.15 trillion last year, the Taipei-based think tank said in a monthly report.
The TIER’s GDP forecast is higher than the 4.71 percent forecast made by Academia Sinica on Dec. 23 and higher than the 4.24 percent forecast by Taiwan Research Institute (台綜院) on Dec. 21. It is also higher compared with the 4.55 percent forecast by the Chung-Hua Institution for Economic Research (中經院) and the 4.62 percent prediction made by the Polaris Research Institute (寶華綜合經濟研究院) on Dec. 16.
In November, the government said it expected the economy to expand 4.51 percent this year, following an estimated 9.98 percent growth for last year.
TIER said in the report that private consumption would make the biggest contribution to this year’s GDP — rising 3.45 percent from last year — because increasing numbers of Chinese tourists are expected to boost tourism and retail sales, and therefore help benefit the service industry and -improve the labor market.
While the US economy is slowing, booming demand in the Asian region, especially from China and India, is expected to sustain stable growth in the nation’s external trade this year, the institute said.
“Exports are estimated to grow 8.07 percent this year and imports will increase 6.34 percent, resulting in a trade surplus of US$29.48 billion,” TIER said.
Last year, the nation’s exports, which account for 70 percent of the nation’s GDP, expanded 34.8 percent to a record US$274.6 billion, while imports surged 44.2 percent to US$251.4 billion, leading to a trade surplus of US$23.3 billion, the Ministry of Finance reported on Jan. 7.
Owing to a higher comparison basis for last year, the growth in government spending and private investment is expected to slow this year, resulting in a contraction of 1.02 percent in fixed investment this year, TIER said.
On the consumer price front, Taiwan’s inflation rate is likely to grow moderately this year because of continued gains in gasoline, electricity and other commodities amid a recovering global economy, TIER said. The institute expects the nation’s consumer prices to rise 2.47 percent and wholesale prices to increase 4.58 percent this year, the report showed.
The value of the New Taiwan dollar, meanwhile, is facing appreciation pressure in the medium and long term, in view of the extra-loose monetary polices adopted by both the US and Japan, TIER said, adding that it expected the local currency to trade at an average of NT$29.7 against the US dollar this year.
The NT dollar continued to trade at a 13-year high versus the greenback recently, closing at NT$29.29 yesterday in Taipei trading, the central bank’s data showed.
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