Na­tion set for 3.7% GDP growth: TIER


The Tai­wan In­sti­tute of Eco­nomic Re­search (TIER, ) yes­ter­day tuned up its fore­cast on the na­tion’s GDP growth to 3.7 per­cent this year on the back of greater eco­nomic prospects and fall­ing oil prices.

The TIER’s fore­cast is 0.03 per­cent­age points higher than its pre­vi­ous fore­cast made in Jan­uary.

The TIER projects that both ex­ports and lo­cal de­mand will grow. Low oil prices and eco­nomic re­cov­ery around the globe al­ready led to a boost in con­sumer con­fi­dence. Im­ports of con­sumer goods saw dou­ble-digit growth in the first quar­ter, and there have also been gains in the re­tail and food sec­tors.

Busi­nesses are ex­pected to step up in­vest­ment as well. Fixed cap­i­tal for­ma­tion by big elec­tron­ics com­pa­nies may ex­pand be­tween 5 and 10 per­cent in 2015. Pri­vate in­vest­ment will rise nearly 6 per­cent, the TIER said.

Look­ing at the global land­scape, the IMF re­cently made a down­ward mod­i­fi­ca­tion of its growth fore­cast of the U.S. and main­land China, but tuned up ex­pec­ta­tions for Ja­pan and Europe.

All in all, the world econ­omy is on track for a “sta­ble growth,” TIER said.

Gor­don Sun ( ), direc­tor of the TIER Macroe­co­nomic Fore­cast­ing Cen­ter, said three un­cer­tain fac­tors loom over the econ­omy down the road.

First, when and by how much will the U.S. Fed hike in­ter­est rate. His­tory shows ev­ery time the Fed made a rate ad­just­ment, a pe­riod of fi­nan­cial tur­moil fol­lowed, Sun said. The sec­ond fac­tor is oil price, for it will af­fect lo­cal firms’ in­ven­tory lev­els. Thirdly, the pre­cip­i­ta­tion that Tai­wan re­ceives in the fu­ture, as wa­ter and util­ity ra­tionings can hurt busi­ness ac­tiv­i­ties, could be a fac­tor.

Stock and Real Es­tate Mar­ket


The lo­cal stock mar­ket has been boom­ing lately. The TIER at­trib­uted the phe­nom­e­non to an over­flow of cap­i­tal now that more than 30 coun­tries have im­ple­mented quan­ti­ta­tive eas­ing.

China’s cen­tral bank has low­ered the cash re­serve ra­tio to pump a sub­stan­tial amount of money into the mar­ket. Along with the re­cently launched Shang­haiHong Kong Stock Connect, it is a sign that Bei­jing is try­ing to pump up the mar­ket, said TIER Pres­i­dent Lin Chien-fu ( ).

It is likely to have ram­i­fi­ca­tions across Asia, and the stock mar­ket in Tai­wan may soon reach 10,000 points, Lin added.

The real es­tate mar­ket does not have such rosy prospects, how­ever. Prop­erty trade in Tai­wan’s six spe­cial mu­nic­i­pal­i­ties — Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaoh­si­ung — dropped be­tween 10 and 48 per­cent so far this year.

The num­ber of up­scale apart­ment trans­ac­tions plunged 78 per­cent. The gov­ern­ment’s heavy tax and loan re­stric­tion poli­cies have wielded im­pact on the mar­ket, ex­plained TIER re­searcher Liu Pei-chen ( ), who pre­dicted a “trad­ing drought” for high-end apart­ments this year.

The con­struc­tion sec­tor also un­der­per­formed. La­bor short­age and con­trac­tual dis­putes have stalled the progress of public con­struc­tion, Liu said.

Newspapers in English

Newspapers from Taiwan

© PressReader. All rights reserved.