The government's target of 4 percent economic growth for this year is not likely to be realized, because skyrocketing crude-oil prices that have been setting record highs every other day for the past week will dash this hope, analysts said yesterday.
"Without a doubt, the non-stop hike in oil prices will depress the already sagging GDP growth this year," said Yang Chia-yen (楊家彥), a research fellow at the Taiwan Institute of Economic Research (TIER).
The spot price for West Texas Intermediate (WTI), the US benchmark crude, hit US$65.79 a barrel for September delivery after hitting a historic high at US$66 at one point yesterday. The price was US$64.8 on Thursday.
Light, sweet crude for September delivery, meanwhile, edged down to US$65.69 on the New York Mercantile Exchange, after hitting a record high at US$66.13 a barrel in earlier trading.
According to TIER's estimate, Taiwan's GDP growth will be cut by 0.16 percent should the average crude oil price stay above US$50 per barrel for the year, but it will widen to 0.25 percent if the average oil price is more than US$60 per barrel, Yang said.
FORECAST CUT
TIER has cut its economic growth forecast from 4.62 percent to 4.41 percent for April, and further lowered it to 3.31 percent for last month. TIER is very likely to cut the figure again due to an impending weakening in exports caused by rocketing oil prices, Yang said.
Liang Kuo-yuan (
"Taiwan's trade surplus will shrink immediately after local oil refiners pay more to buy crude oil," Liang said.
"The impact of surging oil prices seems okay in the US, but the impact on Taiwan is significant given Taiwan imports all crude oil and has lower energy efficiency," he said.
INFLATIONARY THREAT
In addition to the pounding experienced by trade figures, consumer prices will also increase and pose an inflationary threat, Liang said.
The nation's two oil suppliers -- state-run Chinese Petroleum Corp and Formosa Petrochemical Corp -- just last week hiked wholesale gasoline prices by 7.64 percent and 7.39 percent respectively, but the companies said they would not raise prices again in the short term.
However, consumer prices will still go up because oil is the main material in about 15 percent of consumer goods, Yang said.
For the first seven months of the year, the average consumer price was 1.92 percent higher than the same period last month, Yang said.
The figure will keep climbing, pushed by high vegetable prices after two typhoons hit the nation in recent weeks, he said.
To guard against an increase in inflation, the central bank may hike the benchmark interest rates again at the end of next month, Yang said.
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