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Private investment key to Taiwan's economy in 2012: experts

Private investment key to Taiwan's economy in 2012: experts

Taipei, Dec. 31 (CNA) Taiwan's economic growth in 2012 will depend in large part on domestic investment and whether Europe brings its sovereign debt crisis under control, local economists said recently. Since Taiwan's economy relies heavily on exports, the key to Taiwan's economic performance next year will be whether the economic situation in Europe and U.S. stabilizes, Academia Sinica Academician Chung-Ming Kuan said. But because external factors are beyond Taiwan's control, and the European and U.S. economies remain anemic, the country will need to focus on its domestic market if it wants to stimulate its economy in 2012, Kuan said. The Directorate-General of Budget, Accounting and Statistics has estimated that the domestic contribution to GDP growth will increase from 18 percent this year to 30 percent in 2012, a sign of its increasingly important role and the possibility of a slowdown in exports. Of the two main components of the domestic economy -- consumption and investment -- consumption has remained in a "green light" zone, indicating stable growth in the domestic market, according to economic indicators published Tuesday by the Commerce Development Research Institute, which Kuan chairs. But whether domestic consumption has the muscle to generate growth is a big question mark. Ministry of Economic Affairs (MOEA) Department of Statistics Director-General Huang Ji-shih pointed to Taiwan's wholesale, retail, and food service sectors as examples of the limitation of domestic demand. The wholesale sector, he said, was closely tied to Taiwan's foreign trade, so any weakness in foreign trade would affect wholesalers, as was the case in November when the sector's revenues fell 6.44 percent because of trade weakness. Also, the retail and food service sectors, which have domestic sales of about NT$400 billion per month, are not big enough to drive real economic growth, Huang said, leaving private investment to be Taiwan's main driver of domestic growth. Even that will be difficult, however. Last week, Economic Affairs Minister Shih Yen-shiang announced a target of NT$1.1 trillion for private investment in Taiwan in 2012, the same as for 2011, but he said it would be more challenging to meet the target due to the difficult global economic environment. Kuan added that Taiwan's economic indicators have slid in the fourth quarter of 2011, meaning that the country's economic performance in the first half of 2012 will not be too good. Many research institutes have downgraded their GDP growth estimates for 2012, including Academia Sinica, which has lowered its forecast from 5.52 percent to 3.81 percent. The Council for Economic Planning and Development has set a growth target of 4.3 percent. Huang contended, however, that the best time for companies to invest was during a period of economic sluggishness. What is especially important, he said, is that banks continue to lend money to companies during the economic downturn to ensure that private investment projects can carry on. (By Lin Shu-yuan and C.J. Lin)


Updated : 2021-07-24 01:58 GMT+08:00