The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year to 6.05 percent, which would be the highest level since 2011, as strong exports and investments offset slow growth in private consumption.
The agency previously forecast that the economy would expand 5.84 percent this year.
The latest forecast was slightly lower than the 6.09 percent growth forecast by the Directorate-General of Budget, Accounting and Statistics (DGBAS).
The CIER forecast that the economy would grow 3.67 percent next year, which would mark the fourth consecutive rise of more than 3 percent. The forecast is lower than National Development Council Minister Kung Ming-hsin’s (龔明鑫) expectation of 4 percent growth next year.
“The main momentum for the local economy [this year] comes from external factors, such as exports, but next year we expect internal factors, such as private consumption, to contribute as much as external factors,” CIER researcher Peng Su-ling (彭素玲) told a news conference in Taipei. “Private consumption is expected to rebound in 2022 after falling for two years in a row.”
Private consumption retreated 2.53 percent year-on-year last year due to the COVID-19 pandemic and is forecast to have grown just 0.07 percent this year, but is expected to recover next year with an annual gain of 5.02 percent, Peng said.
As for inflationary concerns, which have disrupted the retail sector worldwide, the CIER forecast that full-year growth in the consumer price index (CPI) would be 1.9 percent this year and would be slightly lower at 1.77 percent next year, Peng said.
Rising inflation in Taiwan could mainly be attributed to rising prices of imported goods, such as food, fuel and other items, as inflation surged worldwide, the CIER said, adding that the New Taiwan dollar’s appreciation against the greenback had helped to partially absorb inflationary pressures.
“The government should adopt measures that are more thorough and comprehensive to curb price gouging,” CIER president Chang Chuang-chang (張傳章) told the news conference.
The exchange rate between local currency and the greenback is predicted to average 28.04 next year, compared with 28.03 this year, the CIER said.
Fixed investment and exports, the two main pillars of economic growth this year, are expected to rise 14.54 percent and 26.3 percent year-on-year respectively, but they are forecast to cool down next year due to a high comparison base, with annual gains slowing to 2.18 percent and 5.38 percent respectively, the CIER said.
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