Think tank raises Taiwan 2020 GDP growth forecast to 1.63%

Taipei, Sept. 23 (CNA) The Yuanta-Polaris Research Institute, one of Taiwan's leading economic think tanks, said Wednesday that it has raised its forecast for Taiwan's gross domestic product (GDP) growth for 2020, citing the limited impact of COVID-19.

The think tank has upgraded Taiwan's GDP growth forecast to 1.63 percent from an estimate of 1.5 percent made in March, while expecting the local economy to improve still further in 2021, when the institution forecasts GDP will grow 3.1 percent.

Think tank president Liang Kuo-yuan (梁國源) told reporters that the previous estimate showed caution amid COVID-19, but Taiwan's economy appeared to stabilize later as the country has done well at combating the virus.

In addition, Taiwan's electronics industry has benefited from solid global demand on the back of online learning and remote work, while emerging technologies lent additional support to the tech industry, Liang said.

Yuanta-Polaris said as more and more Taiwanese firms with overseas operations build plants at home, private investment is expected to grow 2.82 percent in 2020, up from an earlier estimate of 2.79 percent, while capital formation is expected to grow 4.98 percent, up from 3.85 percent.

Exports of merchandise and services in 2020 are expected to fall 2.06 percent, a downgrade from an earlier estimate of an increase of 1.27 percent, with border controls imposed to contain COVID-19 dealing a blow to service imports, Yuanta-Polaris said.

In addition, imports of goods and services in 2020 are expected to fall 3.35 percent, a downgrade from an earlier estimate of a 1.30 percent rise.

Yuanta-Polaris has also lowered its forecast for Taiwan's private consumption to minus 1.53 percent from an increase of 1.04 percent.

The think tank said it expects Taiwan's GDP to grow 2.58 percent and 2.28 percent, respectively, in the third and fourth quarter of 2020.

As for 2021, Yuanta-Polaris said private investment is expected to grow 2.50 percent and capital formation 2.20 percent, while exports and imports of merchandise and services are forecast to grow 5.0 percent and 4.07 percent, respectively.

The think tank said private consumption for 2021 will grow 3.40 percent.

Yuanta-Polaris forecast that Taiwan's GDP will grow 3.80 percent, 5.55 percent, 1.80 percent and 1.50 percent in the first, second, third and fourth quarters of 2021.

The think tank said due to an improving performance in exports next year, the Taiwan dollar is expected to strengthen against the U.S. dollar, forecasting that the average value of the greenback against the Taiwan dollar will fall from NT$29.65 forecast in 2020 to NT$28.93 in 2021.