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 3.96 percent, saying that achieving 4 percent growth would be difficult amid worsening inflation, tight monetary policies and geopolitical tensions.
The latest projection is 0.29 percentage points higher than CIER’s forecast in December last year.
It is more conservative than the central bank’s and the Directorate-General of Budget, Accounting and Statistics’ (DGBAS) growth forecasts of more than 4 percent.
Photo: CNA
The CIER’s latest forecast, which it based on strong growth in exports and private investment, also put the institute at odds with the IMF, which on Tuesday cut its forecast for Taiwan’s GDP growth by 0.1 percentage points to 3.2 percent.
CIER president Chang Chuang-chang (張傳章) attributed the upward revision to better-than-expected exports and private investment last quarter, when, he said, firms involved in technology, urban renewal projects and development of renewal energy sources performed impressively.
Taiwan could this year see more balanced growth in domestic and external demand, Chang said.
However, uncertainty persists due to the Russia-Ukraine war, worsening inflation, faster interest rate hikes globally and spreading lockdowns in China, which accounts for about 40 percent of Taiwan’s exports.
Intensifying downside risks make GDP growth of 4 percent increasingly difficult, although not impossible, depending on how unfavorable factors turn out, the academic said.
China has locked down major industrial and business hubs in line with its “zero COVID-19” policy, and manufacturing activity of Taiwanese firms in those areas came to a halt, Chang said.
The lockdowns have led to supply chain disruptions and would dent corporate revenue this month and beyond, if Beijing stands by its draconian virus control measures, he said.
Taiwan’s exports and imports might expand 17.25 percent and 17.42 percent annually this year, softening from 29.34 percent and 33.32 percent last year respectively, CIER said.
The consumer price index (CPI) might accelerate 2.56 percent this year, up from 1.97 percent last year, as the prices of food, oil products and raw materials rise, the institute said.
It would be the first time since 2008 that the gauge exceeds the 2 percent alarm level for a whole year, it added.
In the first quarter of this year, the CPI grew 2.81 percent from a year earlier, DGBAS data showed.
The IMF expects Taiwan’s CPI to grow 2.3 percent this year.
Inflationary pressures might start to ease in the second half of this year, if there are no typhoons to drive prices higher, Chang said.
The unemployment rate would drop to 3.65 percent this year, compared with 3.95 percent last year and the IMF’s forecast of 3.6 percent, as Taiwan learns to coexist with COVID-19 to avoid sacrificing economic activity, CIER said.
The New Taiwan dollar is expected to trade at NT$28.51 against the US dollar, compared with NT$28.02 last year, CIER said.
The forecast represents a 1.75 percent depreciation from last year, but is still better than many other Asian currencies, it said.
Additional reporting by CNA
UNPRECEDENTED PACE: Micron Technology has announced plans to expand manufacturing capabilities with the acquisition of a new chip plant in Miaoli Micron Technology Inc unveiled a newly acquired chip plant in Miaoli County yesterday, as the company expands capacity to meet growing demand for advanced DRAM chips, including high-bandwidth memory chips amid the artificial intelligence boom. The plant in Miaoli County’s Tongluo Township (銅鑼), which Micron acquired from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion, is expected to make a sizeable capacity contribution to the company from fiscal 2028, the company said in a statement. It would be an extended production site of Micron’s large-scale manufacturing hub in Taichung, the company said. As the global semiconductor industry is racing to reach US$1 trillion
A man walks past real-estate advertisements outside a house in Taipei yesterday. The central bank yesterday said it plans to establish an “Inflation-at-Risk” gauge as a supplementary tool for observing inflation, as policymakers express wish to communicate more effectively with the public when making inflation forecasts.
ABOVE LEGAL REQUIREMENT: The Ministry of Economic Affairs is prepared if LNG supply is disrupted, with more than the legal requirement of 11 days of inventory Taiwan has largely secured liquefied natural gas (LNG) supplies through May and arranged about half of June’s supply, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Since the Middle East conflict began on Feb. 28, Taiwan’s LNG inventories have remained more than 12 days, exceeding the legal requirement of 11 days, indicating no major supply concerns for domestic gas and electricity, Kung said at a meeting of the legislature’s Economics Committee in Taipei. The ministry aims to increase the figure to 14 days by the end of next year, he said. While one or two LNG or crude oil shipments for May
Taiwan’s food delivery market could undergo a major shift if Singapore-based Grab Holdings Ltd completes its planned acquisition of Delivery Hero SE’s Foodpanda business in Taiwan, industry experts said. Grab on Monday last week announced it would acquire Foodpanda’s Taiwan operations for US$600 million. The deal is expected to be finalized in the second half of this year, with Grab aiming to complete user migration to its platform by the first half of next year. A duopoly between Uber Eats and Foodpanda dominates Taiwan’s delivery market, a structure that has remained intact since the Fair Trade Commission (FTC) blocked Uber Technologies Inc’s
RSS