Academia Sinica sees 'crêpes Suzette' effect, raises growth forecast

Taipei, July 31 (CNA) Academia Sinica on Wednesday raised its forecast for Taiwan's gross domestic product (GDP) growth in 2024 to 3.88 percent, up 0.86 percentage points from its estimate made in late 2023, citing improved economic situations both at home and abroad.

The upward revision was due to robust exports amid growing demand for advanced technologies such as high-performance computing and artificial intelligence (AI), said Lin Chang-ching (林長青), an adjunct research fellow with Academia Sinica's Institute of Economics.

Describing the current economic situation as analogous to the French dessert "crêpes Suzette," Lin said the dessert's flames, symbolizing strong global demand, have helped bring out the flavor of the crêpes themselves, which represent domestic market conditions.

In a separate statement, the institute said stronger exports have driven more supply chain investment, which could inject new momentum into private investment in the second half of the year after real private investment growth plummeted 7.92 percent in the first quarter.

A stable job market and active stock market trading have also fueled rising consumer confidence, and combined with robust demand for cross-border and business travel, should lead to 2.62 percent growth in private consumption for 2024, the institute said.

Despite the optimism, Lin cautioned that typhoons, salary increases for the public sector, and rising electricity prices and housing costs, could all contribute to inflationary pressures.

"Inflationary pressures in the second half of the year should not be underestimated," Lin said.

Other variables contributing to economic uncertainty include whether the U.S. Federal Reserve will lower rates and by how much from now to the end of the year, which could affect overseas demand and investment, Lin said.

The highly unpredictable U.S. election outcome may also influence U.S.-China tensions and international competition, potentially leading to supply chain restructuring and further fragmentation of the global economy, Lin warned.

Earlier this month, the Taiwan Institute of Economic Research raised its GDP growth forecast for Taiwan to 3.85 percent for 2024, an increase of 0.56 percentage points from an estimate in April.

Similarly, the Chung-Hua Institution for Economic Research adjusted its forecast for Taiwan's 2024 GDP growth on July 20 to 3.81 percent, up from 3.38 percent in April.

Related News

July 31: Google expects Taiwan to see significant economic boost from AI

July 30: Central bank meeting minutes show directors' hawkish stance

July 29: Taiwan economy shows signs of booming in June

July 25: TIER raises Taiwan GDP growth forecast to 3.85% for 2024

July 13: Standard Chartered raises Taiwan GDP growth forecast for 2024

July 5: Taiwan's CPI grows 2.42% in June