TAIPEI (Taiwan News)—The International Monetary Fund's (IMF) forecast Taiwan's GDP growth would be modest this year, rising to 1.7 percent year-on-year (YoY) in 2017, according to the latest World Economic Outlook (WEO) report published Tuesday.
In contrast, Taiwan's Ministry of Economic Affairs' (MOEA) outlook was more optimistic estimating the nation's GDP growth would inch up to 2.0 percent.
Taiwan is classified by IMF as a member of advanced economies in Asia that includes Hong Kong, Singapore, and Korea.
WEO's main criteria for categorizing different nations into advanced economies, emerging market or developing economies is based on per capita income level, export diversification, and degree of integration into the global financial system.
IMF projections for Asian countries economic developments in 2017. (Image courtesy of IMF)
Among neighboring advanced economies in Asia, Taiwan's GDP growth in 2017 ranked last, Hong Kong (2.4 percent), Singapore (2.2 percent), with the IMF projecting economic growth supported by recovering China's import demand.
In contrast, Korea fell short of IMF estimations of reaching 3.0 percent growth, but is expected to reach 2.7 percent growth in 2017, which reflects weaker private consumption growth caused by the termination of government temporary supportive measures, political uncertainties, and high household debt.
According to the IMF report, Taiwan's GDP growth rebounded from the lowest point of 0.7 percent YoY in 2015 to 1.4 percent in 2016, with further positive future developments with the nation’s GDP growth expected to reach 2.5 percent by 2022.
After the nation's exports increased for six consecutive months, Taiwan's MOEA estimated strong growth in the second half of 2017. In addition, the launch of iPhone 8 is projected to benefit Taiwanese companies that are part of its supply chain.
MOEA's analysis is backed by National Development Council Deputy Minister Kao Shien-quey (高仙桂), who also noted financial institutes have raised Taiwan's GDP growth outlook this year.
The Development Bank of Singapore Limited (DBS Bank) and The Australia and New Zealand Banking Group (ANZ) both raised Taiwan's GDP growth outlook for 2017 to 2.1 percent and 2.2 percent, respectively.
Even the Asian Development Bank's more conservative 1.8 percent GDP growth outlook for Taiwan in 2017 is still higher than IMF's.
According to Kao, the government will invest NT$20.9 billion (US$687.12 million) in its Forward-Looking Infrastructure Plan (前瞻基礎建設計畫) by 2017, and government investments will be further raised to NT$89.6 billion in the following year, which will spur public and private investment in the country.
She noted iPhone 8 and IoT developments will support Taiwan's semiconductor industry exports and spur economic growth this year.
IMF estimated other major economic indicators such as consumer prices, current account balance changes, and unemployment rates in Taiwan would remain stable in 2017.
Taiwan consumer prices annual increase is forecast to remain at 1.4 percent in 2017, and might dip to 1.3 percent by 2018, while unemployment rates were up incrementally to 4.0 percent in 2017 from 3.9 percent last year.
Taiwan's current account balance changes are expected to rise slightly from 14.2 percent in 2016 to 14.8 percent in 2017.
In IMF's summary report, the global economic growth outlook for 2017 is projected to be a mere 3.5 percent this year.
The IMF highlighted increasingly protectionist policies in advanced economies as the biggest threat to global trade that can be detrimental for developing and emerging markets.