Taiwan to have 2.01% GDP growth this year: CIER
By John Liu,The China PostTAIPEI, Taiwan -- Taiwan will experience 2.01-percent GDP growth in 2013, according to the latest forecast released by the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday.
October 16, 2013, 12:11 am TWN
A sluggish economic recovery around the world, domestic food safety concerns, recent political conflicts and a pessimistic economic outlook are expected to affect consumption and investment levels, resulting in a relatively low economic growth rate in 2013, CIER said.
Domestic and International Environments
Private consumption was forecast to grow by 1.37 percent year-on-year, with total fixed investment forecast to grow 3.22 percent. Private fixed investment was forecast to grow 4.88 percent, with semiconductor and cloud computing industries leading the way in asset expansion and investment, CIER said.
Japanese Prime Minister Shinzo Abe's aggressive fiscal policy has caused the yen to deprecate, which is likely to affect Taiwan's export industries. The Chinese leadership is also making adjustments to China's economic structure to shift its reliance onto domestic demand instead of foreign demand to stimulate and sustain economic growth.
While China's official economic numbers, such as the Purchasing Manager Index (PMI), indicated a mostly positive economic state, international institutions have revised their China-related predictions downward, a move that shows that the international community is unsure of China's direction regarding structural changes.
Performance by Quarters
Slow international and domestic economic activities resulted in a mere 2.06-percent economic growth in the first half of 2013. Economic growth rates registered 1.67 percent and 2.49 percent in the first and second quarters of 2013, respectively, according to the government's official numbers.
CIER estimated 2.08-percent and 1.86-percent economic growth rates in the third and fourth quarters, with decreased private consumption and private fixed investments contributing to the slowing growth trend. Stagnant income growth is expected to hurt private consumption, which was forecast to grow 1.48 percent in the fourth quarter, lower than third-quarter growth of 2.02 percent.
Slowing World Economy
The world economic recovery is “slowing down,” CIER said, citing that both the IMF and ADB in October adjusted downward their 2013 and 2014 economic forecasts for major economies in the world.
According to the CIER, the U.S. government's budget and debt ceiling issues foreshadowed a less-optimistic economic growth outlook down the road. Emerging economies are also wrestling with slowing economic growth and the ripple effects of the U.S. Fed's tapering of quantitative easing measures. Economic research fellow at Academia Sinica Ray Chou (周雨田) pointed out that despite the fact that Europe's economy has shown signs of improvement, uncertainties as to the eurozone's labor market and financial structures still linger.
Southeast Asian economies were also affected by China's slowing growth. Lower demand from Association of Southeast Asian Nations (ASEAN) member nations hurt Taiwan's September export numbers.