TAIPEI (Taiwan News) — The key sectors of Taiwan’s economy have worsened during the current COVID-19 surge, but the country is still on course for 5 percent GDP growth, the Taiwan Institute of Economic Research (TIER, 台經院) said Friday (June 25).

With the Level 3 alert extended until at least July 12, manufacturing, services, and construction took a hit. However, if the outbreak can be contained and foreign demand keeps up, economic growth will not be affected too badly, UDN reported.

TIER, which is one of the country’s leading economic think tanks, said that earlier predictions of GDP growth exceeding 6 percent this year may no longer be attainable. However, it said 5 percent would not be a problem.

As services and construction are dependent on the domestic market, both slipped for a second and a third consecutive month, respectively, in May, TIER said. In the services sector, restaurants had to switch to takeout only or close down altogether, so the food and wholesale sectors are taking a pessimistic stance about the rest of the year.

The proportion of manufacturers with a positive outlook for the future fell from April by 3.2 percent to 36.8 percent in May. Meanwhile, those feeling pessimistic rose by 5 percent to 12.8 percent, according to the TIER review.

As to inflation, the Consumer Price Index (CPI) for May reached 2.48 percent, partly because of a low comparison base but also because of high oil prices, TIER said. It emphasized the need to observe the evolution of prices during the third quarter before reaching a conclusion for all of 2021.