The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday revised up its forecast for Taiwan’s GDP growth this year from 4.8 percent to 5.16 percent, as exports gain speed on the back of an improving global economy, offsetting sluggish consumer activity caused by a nationwide level 3 COVID-19 alert to combat the outbreak.
The Taipei-based think tank said that external demand remains strong, despite spikes in local COVID-19 infections, and that private investment would also lend support.
“The pace of economic recovery in the US and China has proven faster than expected, boding well for Taiwanese exports,” CIER president Chang Chuang-chang (張傳章) told an online news conference in Taipei.
The two economies account for more than 50 percent of outbound shipments of electronics used in smartphones, laptops, cars, data centers and Internet of Things applications.
Exports are now projected to expand 22.58 this year, while imports are forecast to pick up 22.58 percent, the institute said.
This year’s economy would be characterized by robust exports and lackluster consumer spending, whose recovery has been derailed by the COVID-19 outbreak in May and a soft lockdown thereafter, Chang said.
Export orders, a gauge of actual exports for the next one to three months, supported the observation, as orders last month soared 31.1 percent year-on-year to US$53.73 billion, due to global technology brands building up inventory for the holiday season, the Ministry of Economic Affairs said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the chip supplier of Apple’s iPhones and Macbooks, alone contributes about 5 percent to Taiwan’s GDP growth, said Tsai Yu-tai (蔡鈺泰), head of the Statistics Department at the Directorate-General of Budget, Accounting and Statistics.
TSMC’s aggressive capacity expansion has helped boost private investment, which is expected to gain 8.01 percent from last year, with support from investment to promote the use of green energy sources, Tsai said.
The government should provide targeted relief and subsidies for companies hit hard by disease prevention measures to prevent a collapse of small and medium-sized companies, CIER vice president Wang Jiann-chyuan (王健全) said.
Taiwan’s economy could exceed the 5.16 percent growth forecast — making it the best since 2010 — if the government could soon bring the outbreak under control and introduce a stimulus program to invigorate consumer spending, Chang said.
CIER expects consumer prices to gain 1.72 percent and the wholesale price index to rise 6.79 percent, facilitated by steep increases in international oil and raw material prices.
The New Taiwan dollar is forecast to trade at an average of NT$28.16 against the US dollar, it said.
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