Tai­wan to see 3.355 GDP growth this year: TRI


In the midst of weak­ened eco­nomic re­cov­ery around the world, the Tai­wan Re­search In­sti­tute (TRI, ) yesterday made a 0.08-per­cent­age point down­ward ad­just­ment to the na­tion’s pro­jected GDP growth this year to 3.35 per­cent.

Tai­wan will see 3.32 per­cent, 3.25 per­cent, 3.06 per­cent and 3.73 per­cent growth in each of the four quar­ters this year, ac­cord­ing to the TRI’s re­port.

TRI pre­dicted last De­cem­ber that Tai­wan would see 3.43-per­cent growth this year. As ma­jor economies im­ple­mented loos­ened mon­e­tary poli­cies, the world is ex­pe­ri­enc­ing “a slow and im­bal­anced eco­nomic re­cov­ery,” said TRI Pres­i­dent Wu Tsai-yi ( ) at an eco­nom­ics fo­rum held yesterday.

On the do­mes­tic side, ex­ports have stag­nated, while lo­cal in­vest­ment has turned con­ser­va­tive. More specif­i­cally, the semi­con­duc­tor and air­line in­dus­tries have cut down cap­i­tal ex­penses, while the real es­tate in­dus­try grew less op­ti­mistic af­ter the gov­ern­ment rolled out mea­sures to sup­press the hous­ing mar­ket.

Lower In­vest­ment

Tai­wan’s rel­a­tively high sav­ing rate is another fac­tor that pro­hibits in­vest­ment ac­tiv­i­ties that may oth­er­wise fuel eco­nomic growth, said the TRI, which tuned down pri­vate in­vest­ment growth to 3.9 per­cent.

In ad­di­tion, gov­ern­ment in­vest­ment and state-owned busi­ness in­vest­ment are es­ti­mated to drop 4.48 per­cent and 12.59 per­cent, re­spec­tively.

On the pos­i­tive side, the re­search in­sti­tute tuned up its forecast on pri­vate con­sump­tion growth, from 2.77 per­cent to 2.84 per­cent. Lower costs of crude oil and raw ma­te­rial im­ports have re­sulted in lower con­sumer prices and con­se­quently higher pur­chas­ing power for the public.

With im­prove­ment in the job mar­ket, namely lower un­em­ploy­ment rates and steady growth in reg­u­lar earn­ings, the public has ex­hib­ited more con­fi­dence in house­hold econ­omy, ac­cord­ing to the TRI.

Tai­wan’s Fall­ing Ex­ports

and Im­ports

The TRI also pointed to some un­cer­tain­ties that may im­pact the econ­omy in the lat­ter half of 2015: whether the U.S. econ­omy will gain enough strength to en­able the Fed to raise the rate and de­pre­ci­a­tion of var­i­ous cur­ren­cies as a re­sult of quan­ti­ta­tive eas­ing launched by other economies.

On the do­mes­tic side, the real cause be­hind Tai­wan’s fall­ing ex­ports is still be­ing stud­ied; the Mid­dle East res­pi­ra­tory syn­drome that is rav­aging South Korea may also af­fect the travel in­dus­try in Tai­wan.

Ex­ports of elec­tron­ics prod­ucts, ma­chin­ery and trans­porta­tion equip­ment have shown slight growth, while those of min­eral prod­ucts, chem­i­cal prod­ucts, base met­als, rub­ber and plas­tic prod­ucts all saw de­cline. TRI founder Liu Tai-ying ( ) pointed out that ex­ports have fallen for most coun­tries in Asia, and in Tai­wan’s case, the larger drop of im­ports is a sign that that busi­nesses are not get­ting many or­ders. It is a wor­ri­some de­vel­op­ment, Liu said.

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