The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for the nation’s GDP growth this year to 1.76 percent, from its previous estimate of 1.33 percent, saying exports and private consumption have staged a V-shaped recovery from the COVID-19 pandemic in the second half of the year.
“The upgrade aims to reflect the fast recovery in Taiwan’s exports and domestic demand,” CIER president Chang Chuang-chang (張傳章) told a media briefing.
The Taipei-based think tank said the economy might have expanded 2.77 percent last quarter — emerging from a 0.78 percent decline in the second quarter — and would grow 2.55 percent this quarter.
Photo: Wu Chia-ying, Taipei Times
The showing is impressive, making Taiwan one of the few economies reporting growth as COVID-19 infections surge in many parts of the world, threatening economic activity, the institute said.
Local technology firms have benefited from strong demand for 5G deployment and electronic devices required for a low-contact economy as well as rush orders and order transfers amid US-China tensions, CIER said.
China’s Huawei Technologies Co (華為) avidly stockpiled electronics inventory ahead of the Sept. 15 sales ban imposed by Washington due to national security concerns.
Outbound shipments might have increased 3.86 percent last quarter and would likely gain 2.59 percent in the current quarter from their year-ago levels, CIER said.
Imports would be soft for the whole of this year, due to lower fuel and raw material prices, allowing net external demand to contribute 0.82 percentage points to GDP growth this year, it said.
Domestically, private investment is likely to rise 2.55 percent from last year, aided by companies returning from China, and efforts by local tech firms to expand and maintain technology leadership, CIER said.
The government and public enterprises would lend support by raising their investments by 10.88 percent and 26.39 percent year-on-year respectively, it said.
Active investments would offset weak private consumption, a key GDP component that would stay in negative territory this year, despite a rapid recovery from the third quarter onward, it said.
CIER expects the New Taiwan dollar to trade at an average of NT$29.76 against the US dollar for the year, compared with yesterday’s closing rate of NT$28.932.
Central bank Governor Yang Chin-long (楊金龍) last week told lawmakers that the NT dollar would likely trade above NT$29 per US dollar in the coming six to 12 months, bolstered mainly by strong exports.
CIER forecast the unemployment rate to hover at about 3.99 percent and consumer prices to contract 0.2 percent this year, with the virus infections, US elections and other geopolitical risks creating uncertainty.
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