The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) has left its forecast for GDP growth in Taiwan unchanged for this year at 4.1 percent, despite a surge in locally transmitted cases of COVID-19.
The think tank maintained its growth projection from January after taking into account robust demand globally for information and communications technology devices, Gordon Sun (孫明德), director of the institute’s Economic Forecasting Center, said yesterday.
Such devices make up more than 50 percent of Taiwan’s exports, putting the nation in a good position to benefit from resilient global demand and experience growth of more than 4 percent this year.
Photo: Allen Wu, Taipei Times
The institute’s forecast is in line with government estimates.
Directorate-General of Budget, Accounting and Statistics Minister Chu Tzer-ming (朱澤民) last month said that the agency expected to lower its growth forecast after considering geopolitical crises, but predicted it would still be more than 4 percent this year.
In February, the DGBAS forecast GDP growth of 4.42 percent in Taiwan.
Yesterday, the institute said that the nation’s GDP this year is expected to grow 2 percent in the first quarter, 3.66 percent in the second quarter, 6.15 percent in the third quarter and 4.45 percent in the fourth quarter.
The institute said it expects private consumption to grow 4.43 percent this year, private investment to increase 4.25 percent and fixed capital formation to rise 4.78 percent.
Exports this year are expected to grow 4.37 percent, while imports are expected to grow 4.35 percent, it said.
Although the institute kept its GDP growth forecast unchanged, it revised upward its projected percentage for the consumer price index (CPI) to 2.40 percent from a previous estimate of 1.65 percent.
Commenting on inflation, Sun said that Russia’s invasion of Ukraine has pushed prices for commodities and raw materials sharply higher on the global market, which has, in turn, affected local consumer prices.
“Taiwan has been adversely affected by uncertainty in the global economy, especially from a spike in international crude oil prices following Russia’s invasion of Ukraine,” Sun said.
“COVID-19 lockdowns in China, where many Taiwanese companies manufacture goods, are also expected to affect global supply chains, creating more uncertainty,” Sun added.
If the Russia-Ukraine war and the lockdowns in China come to an end in the second quarter, the upward pressure on inflation would decline in the second half of the year, he said.
In related news, a TIER survey found that sentiment in the manufacturing sector last month fell 2.16 points to 99.21 from a month earlier, marking the third consecutive month of sequential declines.
The decline reflected concern over rising raw material prices, which have led to higher production costs, and over interruptions in the global supply chain due to COVID-19 lockdowns in China, the institute said.
A shortage of chips for automakers might not ease until the first half of next year, said Arisa Liu (劉佩真), who heads the institute’s Taiwan Industry Economics Services databank.
A similar composite index for gauging business sentiment in the service sector rose 0.88 points from a month earlier to 95.05, after falling the previous two months, and sentiment in the construction industry fell 0.67 points to 105.34, marking the second straight month of decline.
Development firms became more cautious in their outlook after the bank last month raised its key interest rate by 25 basis points, which was higher than expected, Liu said, adding that the central bank is expected to maintain a tight monetary policy for the rest of the year.
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