Taiwan’s economy is likely to grow 1.73 percent next year, below the 2 percent mark for the third consecutive year, as exports tick up slightly, but domestic demand drives the bulk of growth, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
“Most people would not feel the benefit of economic growth given the sustained mild pace,” CIER president Wu Chung-shu (吳中書) told an economic forum, attributing the expected upswing partly to a low base this year.
The nation’s economy contracted in the first quarter and staged a small and fragile recovery in the following quarters, according to the Directorate-General of Accounting, Budget and Statistics.
External demand might lift GDP by 0.31 percentage points next year, reversing a drag this year, the Taipei-based think tank said, adding that domestic demand would contribute 1.42 percentage points.
That is because the global economy will not be much brighter next year — with the US poised for stable growth, the eurozone and Japan mired in sluggish recovery and China struggling to curb a slowdown, Wu said.
The global backdrop suggests that exports might gain 3.41 percent annually to US$288.13 billion next year, while imports are likely to grow by 3.57 percent to US$237.78 billion, compared with a decline of 2.35 percent and 3.22 percent respectively this year, the CIER report said.
Taiwan is home to the world’s largest contract chipmakers, chip designers, and other critical electronic components used in smartphones, PCs and peripheral products, and Internet of Things applications.
National Development Council Deputy Minister Kao Shien-quey (高仙桂) said it is difficult to make GDP projections for next year in light of political uncertainty across the world.
US president-elect Donald Trump is to assume office on Jan. 20, and several European and Asian nations are slated to hold national elections later in the year, Kao said.
The policy changes of incoming administrations will have implications for the global economy, Kao said, adding that monetary policy changes by global central banks will also have repercussions on capital markets worldwide.
On the domestic front, private investment and private consumption would increase 1.7 percent and 2.85 percent respectively, compared with pickups of 1.95 percent and 2.21 percent forecast for this year, CIER said.
The figures suggest a lack of consumer confidence going forward, while local technology firms, especially semiconductor makers, will continue to buy capital equipment to maintain their technology advancement, CIER said.
CIER expects consumer prices to rise from 1.36 percent to 1.45 percent and the jobless rate to decline from 3.95 percent to 3.92 percent now that crude oil prices have rebounded.
The New Taiwan dollar will trade at an average of NT$32.35 against the US dollar next year, virtually unchanged from this year’s NT$32.36, the institute said.
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