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Think tank cuts Taiwan 2016 GDP growth forecast to 1.42%

Think tank cuts Taiwan 2016 GDP growth forecast to 1.42%

Taipei, March 23 (CNA) The Yuanta-Polaris Research Institute, one of Taiwan's leading think tanks, cut its forecast for Taiwan's gross domestic product (GDP) growth for 2016 to 1.42 percent from an earlier estimate of a 1.93 percent rise, citing a worse-than-expected export performance amid weakening global demand.

The forecast was the lowest among Taiwan's major think tanks so far.

The Chung-Hua Institution for Economic Research (CIER) has predicted that Taiwan's GDP will grow 2.24 percent in 2016, while the Taiwan Research Institute (TRI) has anticipated that growth will hit 2.06 percent.

More downbeat than the CIER and the TRI, the Taiwan Institute of Economic Research (TIER) has forecast that Taiwan's 2016 GDP will grow only 1.57 percent, and Academia Sinica, Taiwan's top academic research institution, has estimated that the 2016 growth will reach 1.74 percent.

The Yuanta-Polaris forecast was also lower than a forecast of a 1.47 percent increase made by the Directorate General of Budget, Accounting and Statistics (DGBAS). The DGBAS cut its estimate from 2.32 percent in mid-February.

At a time of falling global demand, Taiwan reported an 11.8 percent year-on-year decline in exports for February, marking the 13th consecutive month that the country's outbound sales have registered a decrease.

In the wake of the poor export figures, Yuanta-Polaris has cut its forecast of Taiwan's merchandise and service exports for 2016 to a decline of 0.32 percent from an earlier forecast of a 2.02 percent increase, and also lowered its forecast of the country's import growth to a drop of 0.42 percent from a 2 percent rise.

The global economic slowdown also had an adverse impact on Taiwan's investment, the think tank said. It has cut its forecast for Taiwan's private investment growth for 2016 to 1.69 percent from 2.36 percent, and has lowered the growth of fixed capital formation growth to 2.35 percent from 2.58 percent.

Yuanta-Polaris said that it has cut its forecast of Taiwan's private consumption for 2016 to 1.92 percent from 2.03 percent. Liang Kuo-yuan, president of Yuanta-Polaris, said that although the local equity market rebounded in recent sessions, the gains failed to reflect the weakness of economic fundamentals, since the upturn in equities was largely boosted by ample liquidity in reflection of moves by major central banks in the world to pump funds into the market.

Since the beginning of this year, the weighted index on the Taiwan Stock Exchange has gained 5.37 percent, largely on constant foreign inflows. Yuanta-Polaris has forecast Taiwan's GDP growth for the first quarter at minus 0.55 percent, 1.43 percent for the second quarter, 2.33 percent for the third quarter and 2.37 percent for the fourth quarter.

Liang said that in a bid to give a boost to the local economy and prevent more hot money from flowing into Taiwan, the central bank is expected to cut its key interest rates by 0.125 percentage points in a quarterly policymaking meeting scheduled for Thursday.

Liang said that the interest rate cut also reflects the fact that there is little concern over inflation in Taiwan. Yuanta-Polaris has forecast that Taiwan's consumer price index will rise 0.89 percent for 2016. (By Tsai Yi-chu and Frances Huang)

Updated : 2021-08-02 15:04 GMT+08:00