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Think tank raises Taiwan's 2018 GDP growth forecast to over 2.6%

2018/10/20 12:31:50

Taipei, Oct. 20 (CNA) The Chung-Hua Institution for Economic Research (CIER), one of the leading think tanks in Taiwan, has raised its forecast of Taiwan's gross domestic product (GDP) growth for 2018 to more than 2.6 percent, citing strong exports.

However, the think tank said Taiwan's economic growth momentum is expected to moderate to some extent amid the uncertainty resulting from the escalating trade friction between the United States and China.

CIER said Taiwan's GDP in 2018 is expected to grow 2.61 percent from a year earlier, up from its earlier estimate of a 2.48 percent increase made in July.

The revised GDP growth forecast showed the think tank appeared more cautious than the government. In mid-August, the Directorate General of Budget, Accounting and Statistics (GDBAS) raised its estimate of Taiwan's economic growth to 2.69 percent from 2.60 percent, after the economy performed better-than-expected in the first half of this year.

According to the CIER, Taiwan's exports of merchandise and services are expected to grow 4.89 percent in 2018, up from an earlier forecast of 3.26 percent, while imports for 2018 are expected to rise 5.40 percent, compared with an earlier forecast of 3.43 percent.

CIER said private consumption for 2018 is expected to grow 2.31 percent, compared with an earlier prediction of a 1.95 percent increase, while capital formation is expected to rise 2.29 percent, down from an earlier forecast of 3.22 percent.

CIER said private investments are expected to grow 1.56 percent in 2018, a downgrade from an earlier forecast of a 2.50 percent increase.

The think tank said Taiwan's consumer prices are expected to grow 1.65 percent in 2018, unchanged from its earlier forecast, but higher than DGBAS's prediction of a 1.52 percent increase.

Wang Jiann-chyuan (王健全), acting president of CIER, said that Taiwan's exporters have benefited from the moves made by foreign buyers to shift their orders to Taiwanese firms before a 10 percent tariff imposed by Washington on US$200 billion worth of China goods is set to rise to 25 percent by the end of this year.

However, Wang said the benefits could be short term since trade conflicts between the U.S. and China showed no signs of being resolved anytime soon and rising tensions could affect Taiwanese investors operating in China.

U.S. President Donald Trump has threatened to slap tariffs on an additional US$267 billion worth of Chinese goods.

He said the impact is expected to become obvious in the first half of next year so CIER preferred to keep alert over the development; it has forecast Taiwan's GDP growth will slow to 2.18 percent in 2019.

The 2019 forecast reflected CIER's more cautious mentality than the DGBAS, which predicted Taiwan's GDP will grow 2.55 percent next year.

In 2019, Taiwan's exports of merchandise and services are expected to grow 2.98 percent, private investments could rise 3.15 percent and private consumption is predicted to grow 1.81 percent, according to CIER.

CIER said Taiwan's consumer prices could rise 1.46 percent in 2019, moderating from the growth in 2018.

(By Pan Tzu-yu and Frances Huang)