‘CHALLENGES’: The president of the Taiwan Institute for Economic Research said that the numbers would be affected by the low base and improvement would not be fast
By Crystal Hsu
STAFF REPORTER
Friday, Nov 06, 2009, Page 12
Taiwan’s economy is expected to grow 4.21 percent next year, after contracting an estimated 2.89 percent this year, as the world continues a slow and protracted recovery from the global economic crisis, the Taiwan Institute for Economic Research (TIER, 台經院) forecast yesterday.
“We expect GDP to expand 4.21 percent in 2010 when exit strategies will top the challenges for central banks around the globe,” TIER president David Hong (洪德生) told an economic forum in Taipei.
Most monetary regulators maintain a cautious approach to avoid double dips as job markets continue to deteriorate and the numbers are unlikely to show fast or significant improvement next year, Hong said.
Exports, which make up about 70 percent of GDP value, are predicted to rise 10.39 percent next year to NT$8.79 trillion (US$270.6 billion), from an estimated 10.97 percent drop this year, an institute report said.
World trade is forecast to climb a modest 2.1 percent to 4.1 percent next year, from a decline of 9.4 percent to 16 percent this year, Hong said, citing international research bodies.
“Given the depth of the slump, the [anticipated] expansion has more to do with the low base effect,” Hong said.
Private consumption, accounting for between 55 percent and 60 percent of GDP, is projected to increase by 1.89 percent next year, from 0.37 percent this year, the report said.
Hong said that although business closures and downsizing slowed, the jobless rate would remain high next year with little wage improvement.
“Against this backdrop, people would be wary when planning a budget,” he said, adding the government’s planned economic cooperation framework agreement (ECFA) with China may add uncertainty to the job market.
Hong urged the government to draw up supporting measures to ease the ECFA’s possible impact on Taiwan’s unemployment situation. TIER will disclose its own ECFA assessment before the end of this year, he said.
Private investment, the main drag on the economy this year, is expected to edge up 2.97 percent, from a projected 26.07 percent contraction this year, the institute said.
TIER forecast the local currency will rise to NT$31.396 against the greenback next year, from an estimated average of NT$32.980 this year.
As oil costs picked up 5.1 percent last month from September and sugar and cotton prices surged 84 and 52 percent respectively, Hong said policymakers should also brace for inflation pressure triggered by US Federal Reserve’s quantitative easing.