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Taiwan's economic growth forecast to be under 3% (update)

2012/06/13 18:59:31

Taipei, June 13 (CNA) Taiwan's economic growth is forecast to hit below 3 percent in 2012 because of continuing global economic uncertainty and the country's weak exports in the first quarter, a local research institute said Wednesday.

The Taiwan Research Institute projected that the country's economy will grow 2.52 percent this year, citing the debt problems in the eurozone, the weak economic recovery in the United States and Japan, and Taiwan's power rate increases and proposed capital gains tax on stock transactions.

It was by far the lowest forecast by any local economic think tanks and the only one under 3 percent, Wu Tsai-yi, the institute's president, told a forum in Taipei.

"Amid an economic situation like this, it is currently 'cold' both domestically and internationally," Wu said, citing slight growth in domestic consumption and negative annual growth of Taiwanese exports.

Taiwan's first-quarter domestic consumption increased barely 2 percent from the same period of last year, while its exports over the first five months posted a negative annual growth of 5 percent, according to the Taipei-based think tank.

Taiwan exported US$26.1 billion-worth of goods in May, marking a 2.2 percent increase from April but a 6.3 percent year-on-year decrease, government statistics showed.

The institute also projected a negative annual growth rate in the second quarter of 0.18 percent due to worse-than-expected exports and poor industrial production.

Fortunately, the economy will bottom out in the second quarter, Wu forecast, adding that his institute predicted growth rates of 3.75 percent and 5.81 percent in the third and fourth quarters, respectively.

Although the power rate increases and the capital gains tax plan have affected stock market transactions, the consumer price index and wholesale price index are likely to hit 1.93 percent and 1.64 percent, respectively, Wu said.

According to government tallies released in late May, Taiwan's economy was expected to grow 3.03 percent in 2012, while other local research institutes forecast growth of some 3.5 percent.

(By James Lee)