The IMF has raised its forecast for Taiwan’s GDP growth for this year and next year.
In its World Economic Outlook report issued on Tuesday, the IMF raised its forecast for Taiwan’s GDP growth this year to 5.9 percent, up 1.2 percentage points from its April estimate.
The estimate was slightly higher than the 5.88 percent annual growth that the Directorate-General of Budget, Accounting and Statistics (DGBAS) forecast in August.
As for Taiwan’s GDP growth next year, the IMF raised it to 3.3 percent, up 0.3 percentage points from its April estimate and slightly lower than the DGBAS’ estimate of 3.69 percent.
The report also predicted that Taiwan’s consumer price index, a major gauge of inflation, would rise 1.6 percent this year and 1.5 percent next year, while the unemployment rate would be 3.8 percent this year and 3.6 percent next year.
South Korea, Singapore and Hong Kong — the other economies comprising the four Asian Tigers — are expected to see their economies grow 4.3 percent, 6 percent and 6.4 percent this year respectively, while their economies are expected to increase 3.3 percent, 3.2 percent and 3.5 percent next year respectively, the report said.
China’s economy is expected to grow 8 percent this year and 5.6 percent next year, Japan is expected to grow 2.4 percent and 3.2 percent this year and next year respectively, while the US is expected to grow 6 percent and 5.2 percent respectively, it said.
Worldwide supply chain disruptions are driving price increases and draining momentum from economies recovering from the COVID-19 pandemic, the IMF said.
The ongoing pandemic and a failure to distribute vaccines worldwide is worsening the economic divide and prospects for developing nations, it said.
The global economy is expected to grow 5.9 percent this year, only slightly lower than projected in July, before slowing to 4.9 percent next year, the report said.
“This recovery is really quite unique,” IMF chief economist Gita Gopinath said on the sidelines of the Annual Meetings of the IMF and World Bank.
Despite a strong return in demand, “the supply side has not been able to come back as quickly,” hampered in part by the spread of the Delta variant of SARS-CoV-2, which has made people reluctant to return to their jobs, Gopinath said.
Those labor shortages are “feeding into price pressures” in major economies, she said.
Energy prices have hit multi-year highs in the past few days, with oil above US$80 a barrel, weighing on households.
Gopinath said she expects energy prices to begin to retreat by the end of the first quarter next year.
Yet if higher inflation becomes entrenched, it could force central banks to respond aggressively, and rising interest rates would slow the recovery, the IMF said.
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