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.