Economic growth is expected to moderate to 2.51 percent next year after expanding by an estimated 3.01 percent this year, as global demand for Taiwanese exports further slows amid high inflation and drastic monetary tightening, the Taiwan Research Institute (TRI, 台灣綜合研究院) said yesterday.
“The global economic scene looks pessimistic going forward, as the war in Ukraine drove up global fuel prices and prompted major central banks to hike interest rates to tame inflation,” institute founder Liu Tai-ying (劉泰英) said.
The twists have dashed hopes of a continued recovery from the COVID-19 pandemic this year, as evidenced by the fast retreat in the nation’s exports, the New Taipei City-based institute said.
Photo: Hsu Tzu-ling, Taipei Times
The growth projections for this year and next year made TRI the most conservative among major local think tanks.
The world is now heading toward a recession, which is unfavorable to Taiwanese exporters of electronics used in smartphones, notebook computers, wearables, TVs and vehicles, it said.
That means private consumption would take over as the main driver of growth, expanding 5.14 percent next year after estimated growth of 3.27 percent this year, institute president Wu Tsai-yi (吳再益) said.
Private investment would increase a modest 2.48 percent, from an impressive 7.24 percent gain this year, as major companies cut or postpone capital expenditure to deal with order cancelations and soft end-market demand, Wu said.
Both tech and non-tech manufacturers are giving top priority to inventory adjustments, which might need more time than expected, as downside risks abroad heighten, he said.
Interest rates would remain high even if global central banks were to slow the pace of tightening, the institute said, adding that China’s lingering COVID-19 restrictions would continue to inhibit economic activity even though it has displayed some flexibility.
China’s slowdown is to blame for the double-digit percentage-point decline in Taiwan’s exports last month, the Ministry of Finance said last week, adding that it might not improve this quarter and in the first half of next year.
The institute is expecting a 1.96 percent increase in consumer prices next year, below the central bank’s target of at most 2 percent.
Exports of goods and services are forecast to grow 3.37 percent next year, slower than imports’ projected increase of 5.44 percent, the institute said.
The New Taiwan dollar would trade at an average of NT$30.79 percent against the US currency, weakening from NT$29.83 this year, it predicted.
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