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Think tank lowers economic growth forecast 1.12%

TAIPEI -- The Yuanta-Polaris Research Institute has lowered its forecast for Taiwan's gross domestic product (GDP) growth in 2012 because of continuing global economic uncertainty and the country's weak exports.

The Taipei-based economic think tank released figures Thursday that project the economy to grow 1.38 percent this year, down 1.12 percentage points from the 2.5-percent increase it forecast in June, marking the lowest estimate among local think tanks.

Liang Kuo-yuan, the institute's president, attributed the downward revision mainly to worse-than-expected export figures in July and August. Taiwan is an export-oriented economy.

Taiwan's July and August exports fell 11.6 percent and 4.2 percent from the same month of last year, respectively. January-August exports totaled US$196.3 billion, an annual decline of 5.6 percent, according to government statistics.

The country's exports have posted six consecutive months of negative annual growth since March.

In addition to Taiwan's slumping export figures, global economic uncertainty remains, despite economy-boosting monetary policies by the European Central Bank (ECB) and the United States Federal Reserve, Liang said at a press briefing in Taipei.

In early September, the ECB announced that it would purchase bonds issued by eurozone member-states, while the U.S. Fed said it would spend US$40 billion per month to buy mortgage-backed securities for as long as it deems necessary. After adding ongoing bond-buying measures, the U.S. central bank is expected to inject US$85 billion per month into the market.

“It will still take time to see if these measures will be effective,” said Liang.

In August, the government cut its official forecast for GDP growth in 2012 to 1.66 percent, down from a previous estimate of 2.08 percent, while Academia Sinica, the country's top research institute, lowered its forecast to 1.94 percent in July.

The institute also forecast a 1.98-percent rise in Taiwan's consumer price index for 2012, revising its projection of a 1.9-percent increase made in June.

Taiwan's GDP in 2013 is forecast to reach 3.85 percent due to a low base period this year, according to the institute.

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