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Economy to advance at an annual 2.58% this year: Central Bank

2018/03/22 22:25:06

CNA file photo

Taipei, March 22 (CNA) Taiwan's economic growth rate for this year is projected to be 2.58 percent, with the consumer price index (CPI) and core CPI set to grow at a pace of 1.27% and 1.26% respectively in 2018, according to the Central Bank's forecast Thursday.

At its quarterly policymaking meeting, held the same day, the bank decided to keep its benchmark discount rate at 1.375 percent while leaving its rates on accommodations against secured loans and on temporary accommodations unchanged at 1.75 percent and 3.625 percent, respectively.

It was the seventh consecutive quarter the bank has declined to change its key interest rates, a decision that was widely expected at the first policymaking meeting under new bank Governor Yang Chin-long (楊金龍), who took office in February.

Yang Chin-long (楊金龍)/CNA file photo

According a Central Bank press release, for the year to date, exports have risen adequately while capital equipment imports have decreased only slightly.

Consumer confidence has been strong and the economy has continued to grow, while the labor market is stable with increasing employment and falling unemployment, the press release said.

While export growth could weaken slightly in 2018 due to the base effect, the government's Forward-Looking Infrastructure Development Program may reinforce private investment, the Central Bank pointed out, adding that private consumption is likely to be boosted by mild wage increases.

The effects will combine to bolster domestic demand as a major force driving economic growth, the Central Bank noted, adding that at 2.58 percent its annual economic growth forecast is only slightly lower than 2.86 percent last year.

The average year-on-year CPI growth rate was 1.54% for the first two months of the year, mainly driven by higher vegetable and cigarette prices, the Central Bank said, adding that core inflation, excluding vegetables, fruit and energy items, grew at an average annual rate of 1.61%, indicating a moderate price uptick.

Meanwhile, domestic prices are likely to rise as the prices of imported raw materials such as crude oil are expected to increase this year, the Central Bank said, adding that wage increases in the private sector could also be influenced by hikes in the minimum wage and public sector salaries.

However, because the output gap remains negative, greater demand will result in only moderate inflationary pressure and inflation will stabilize, said the Central Bank.

(By Chiu Po-sheng and William Yen)