Local institutions forecast over 3% GDP growth
By John Liu, The China Post
June 18, 2014, 12:00 am TWN
TAIPEI, Taiwan -- Taiwan's academia, private business and government agencies forecast that Taiwan will see 3-percent GDP growth this year.
According to joint research conducted by Cathay Financial Holdings (國泰金控) and National Taiwan University, Taiwan will see economic growth of 3.29 percent in 2014. This estimate is 0.31 percentage points higher than the research team's previous 2.98-percent forecast.
Economic recovery in the U.S. and the eurozone is likely to drive foreign demand, while loose money supply will provide momentum for domestic consumption. As such, it will not be difficult for Taiwan to realize a 3-percent economic growth rate this year, said Cathay Financial.
Taiwan had 2.09-percent GDP growth last year. The research team believes Taiwan will see 2.8-percent GDP growth this year at the minimum.
In April, the IMF adjusted its economic growth forecast of emerging economies down to 3.6 percent. Nevertheless, analysts believe it will have limited impact on Taiwan's economy, and economic recovery in Western nations and mainland China will be the main driver for Taiwan's economic growth this year.
Domestically, with consumer confidence growing and the job market improving, the research team predicted strong consumption down the road. In addition, loose monetary supply will also facilitate consumption, contributing to economic growth.
The central bank is scheduled to hold a board meeting next week. Cathay Financial believes that the bank will keep the interest rate unchanged as it has done for a long while. Nevertheless, with rising price levels, Cathay Financial does not exclude the possibility that the central bank will adjust the interest rate in the second half of the year.
Taiwan to See 3.1% GDP Growth This Year: TRI
The Taiwan Research Institute (TRI) also made an adjustment to its forecast on Taiwan's economic growth rate this year, up from 2.81 percent to 3.1 percent.
TRI concurred with Cathay Financial that advanced economies will be the bellwether to drive global recovery. In addition, most nations adopted a rather loose fiscal policy in the first half of 2014, contributing to a loose monetary supply.
Beginning in the fourth quarter last year, signs of improvement are shown in Taiwan's economic indicators, and the trend is expected to continue in the rest of the year.
Domestically, an improving job market has resulted in relatively low unemployment rates in recent years. Although there is little change in the nation's average regular income, a better job market has contributed to higher confidence and purchasing power for average folks.
Taiwan's recently booming stock market is also reflecting a better economy. Statistics show business revenues have grown for eight consecutive months, indicating ever-increasing consumer purchases. The TRI forecast the private consumption to grow 2.53 percent, which was up by 0.71 percentage points from its previous estimate of 1.82 percent.
Thanks to the recovery in western nations, TRI expects good performance in the electronics sector in the future, and that total exports for the year will grow 4.09 percent, up 0.28 percentage point from last year.
With a more prosperous domestic economy, the TRI expects imports to grow 4.3 percent this year, which is higher than last year's 3.91 percent.