Na­tion should aim for 1% GDP growth in ’15: think tank


With the stock mar­ket’s re­cent plunge, the na­tion may see neg­a­tive GDP growth in the third quar­ter, and “1-per­cent growth” will be the new tar­get that Tai­wan has to aim for this year, the Tai­wan In­sti­tute of Eco­nomic Re­search (TIER, ) said yesterday.

In an eco­nomic out­look re­port re­leased yesterday, the TIER said China and the U.S.’ worse-than- ex­pected eco­nomic per­for­mance has wielded an ad­verse im­pact on ex­ports from Ja­pan, South Korea and South­east Asian coun­tries.

Tai­wan’s ex­ports have suf­fered a blow, too, and it is dif­fi­cult to re­verse the trend of “re­duc­tion in both prices and trade vol­ume” for Tai­wan’s main ex­port items. It will also add un­cer­tainty in the sec­ond half of the year, said the think tank.

Do­mes­tic de­mand started to de­cline in July, which is likely to re­sult in third-quar­ter neg­a­tive growth, said Gor­don Sun ( ), di­rec­tor of TIER’s Macroe­co­nomic Fore­cast­ing Cen­ter.

Do­mes­tic de­mand has served as a but­tress for the econ­omy in ear­lier quar­ters amid the global eco­nomic slow­down; how­ever, this line of de­fense is weak­en­ing judg­ing by re­tail­ers’ fall­ing busi­ness rev­enues, Sun said.

The Di­rec­torate- Gen­eral of Bud­get, Ac­count­ing and Sta­tis­tics (DGBAS, ) forecast ear­lier that Tai­wan would log 0.1-per­cent and 1-per­cent growth in the third and fourth quar­ter, re­spec­tively.

Sun said, how­ever, that if the stock cri­sis is not re­solved, the na­tion will be striv­ing to main­tain 1-per­cent growth over­all in 2015.

Prop­erty Mar­ket Will Not Col­lapse

The eco­nomic mon­i­tor­ing score for the man­u­fac­tur­ing and ser­vice sec­tors con­tin­ued on a down­ward path, dip­ping 1.62 point and 2.57 points, re­spec­tively in July, ac­cord­ing to the TIER.

The mon­i­tor­ing score for the con­struc­tion in­dus­try per­formed bet­ter and rose 0.85 points.

TIER re­searcher Liu Pei-chen ( ) said while prop­erty prices will see down­ward ad­just­ment down the road, it is very un­likely that the real es­tate mar­ket will col­lapse.

She places con­fi­dence in the gov­ern­ment’s fi­nan­cial poli­cies and the cen­tral bank’s credit con­trol mea­sures, and added that only a low pro­por­tion of stock in­vestors will con­sider selling real es­tate to make up for losses in the stock mar­ket.

Tai­wan Stocks Had ‘a flash in the pan’

The Tai­wan Stock Ex­change in­dex closed up 265.30 points, or 3.58 per­cent, at 7,675.64 Tues­day.

TIER’s Sun is not par­tic­u­larly im­pressed, stat­ing that with a low turnover the phe­nom­e­non is only “a flash in the pan.” A re­bound with­out great trade vol­ume does not mean much, he said.

While the gov­ern­ment has in­tro­duced poli­cies such as for­bid­ding stock short selling be­low the pre­vi­ous day’s clos­ing prices, these band-aid short-term mea­sures cer­tainly can­not pre­vent a fur­ther tum­ble in the event Chi­nese and U.S. stocks con­tinue to fall, Sun said.

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