The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for the nation’s GDP growth from 1.83 to 1.91 percent and expects the momentum to more than double next year as the adverse effects of the COVID-19 pandemic begin to fade.
Taiwan’s economy might expand 4.1 percent next year, bolstered by strong demand for advanced semiconductors, realignment of technology supply chains and renewable energy investment, the Taipei-based think tank said.
Yesterday’s report was the first time that TIER has issued a forecast for the economy for next year.
Photo: Li Ya-wen, Taipei Times
GDP is expected to grow 3.72 percent in the first quarter, 6.68 percent in the second, 3.23 percent in the third and 2.63 percent in the fourth quarter, the think tank said in a report.
Demand for 5G wireless communications devices is expected to swell next year as the world emerges from the pandemic, aided by the creation of vaccines, TIER president Chang Chien-yi (張建一) told a news conference.
International research institutions share the view that the global economy would improve next year, which bodes well for Taiwan’s exports, he said.
Taiwan’s semiconductor manufacturers would benefit from the trend, he said.
Reshoring by technology firms moving high-end production lines to Taiwan from China would also boost outbound shipments, with the effect already evident for exports of information and communications technology products, government data showed.
Exports are expected to grow from a revised 1.85 percent this year to 4.87 percent next year, TIER’s report said.
Private investment, a main growth driver last year and in the first half of this year, might climb 4.64 percent next year, compared with 2.14 percent this year, it said.
Local semiconductor firms would continue to upgrade to meet customer demand for the newest technologies, and the government’s promotion of renewable energy sources would attract more foreign investment, TIER said.
Private consumption could rebound from a 1.61 decline this year to a 3.18 percent increase next year, as people would feel more comfortable spending money even though virus infections are spiking again in many parts of the world, TIER economist Gordon Sun (孫明德) said.
COVID-19 mortality rates have noticeably subsided as people adapt to disease-prevention measures, Sun said.
However, Sun said that he expects travel restrictions to stay in place in Taiwan and around the world next year, paving the way for revenge spending after nations lift their disease-prevention controls.
Sinopac Financial Holdings Co (永豐金控) chief economist Jack Huang (黃蔭基) told the news conference that he is expects the TAIEX to rally to the 14,000-point mark next year, thanks to the nation’s healthy economy and profit-making tech names.
“Next year will be a prosperous year,” the best year for the nation’s economy in five years and favorable for private consumption, Huang said.
However, he said that US-China tensions could still send ripples through the global economy.
The Directorate General of Budget, Accounting and Statistics in August predicted Taiwan’s GDP would grow 3.92 percent next year. It is due to update its forecast on Nov. 27.
Additional reporting by CNA
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