The Taiwan Research Institute (TRI, 台灣綜合研究院) and Cathay Financial Holding Co (國泰金控) yesterday updated their forecasts for the nation’s GDP growth next year to 3.18 percent and 2.8 percent respectively, as both are looking at an economic recovery, but differed about the pace.
However, the TRI cut its forecast for GDP growth for this year from 1.45 percent to 1.41 percent, as exports and private investment turned out softer than expected, despite private consumption single-handedly upholding the economy with an 8.31 percent increase, TRI president Wu Tsai-yi (吳再益) told an economic forum in Taipei.
Private consumption would normalize next year with a 2.3 percent pickup as the benefits of pent-up demand taper off, but external demand would improve, even though uncertainty linked to geopolitical tensions would continue to weigh, the TRI said, expecting exports to expand 6.08 percent and imports to increase by 7.24 percent.
Photo: Lam Yik Fei, Bloomberg
Private investment would grow 2.14 percent next year, from shrinking 9.96 percent this year, as firms regain investment interest, Wu said.
To rekindle the economy, the government should use the nation’s excess savings to invest in public infrastructure and private investment projects, TRI founder Liu Tai-ying (劉泰英) said.
Cathay Financial expects the economy to regain momentum next year by expanding 2.8 percent year-on-year, compared with the 2.9 percent growth it forecast three months earlier, on concerns GDP growth in the US and China would slow.
National Central University economics professor Hsu Chih-chiang (徐之強), who released the forecast on behalf of Cathay Financial, said a slowdown in China and the US would limit the pace of recovery in Taiwan.
The central bank is today expected to keep interest rates unchanged for the third straight quarter, as consumer prices have a fair chance of returning to the 2 percent target next year and would stay there throughout next year, Hsu said.
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