World Economy

Taiwan Think Tank Raises GDP Growth Forecast

Taiwan’s growth is expected to still lag behind the global average.Taiwan’s growth is expected to still lag behind the global average.

The Yuanta-Polaris Research Institute, one of Taiwan’s leading economic think tanks, said Wednesday that it has raised its forecast for Taiwan’s gross domestic product growth for 2018 to 2.2% at a time of continued global economic recovery.

GDP growth forecast for 2018 has been upgraded from an earlier estimate of 2.1% made in September, according to the think tank, VNA reported.

The local economy is expected to grow 2.51% in the first quarter of next year, 2.65% in the second, 1.63% in the third and 2.04% in the fourth, Yuanta-Polaris said. In addition, the think tank has also raised its forecast for Taiwan’s GDP growth for this year to 2.62% from an earlier estimate of 2.25%.

Yuanta-Polaris forecasts were in line with the government’s figures, as the Directorate General of Budget, Accounting and Statistics pegged Taiwan’s GDP growth for 2017 at 2.58% and for 2018 at 2.29%.

Yuanta-Polaris President Liang Kuo-yuan told the press that a strong export performance is expected to continue to drive Taiwan’s economy upward in 2017 and 2018. Liang said that while the economy has been on the road to recovery from growth of only 1.41% in 2015, the country’s growth is expected to still lag behind the global average.

  Worries Persist

Liang cited a forecast by the International Monetary Fund, which said the global average economic growth is expected to hit 3.62% in 2017, and 3.71% in 2018.

Despite solid exports, the economist said that his institution remains worried about lackluster domestic demand, referring to retail sales for the first 11 months of this year that grew only 0.9% from a year earlier.

Liang said some uncertainty is expected to affect the pace of Taiwan’s economic recovery, adding that a booming equity market could pave the way for a correction in asset prices at a time when major central banks, in particular the US Federal Reserve, has started to tighten its monetary policy and cut liquidity.

In addition, newly passed tax reforms in the United States to lower the tax burden on enterprises operating in the US market could prompt many American investors to move their funds back home, Liang said.

He also expressed concern about rising trade protectionism advocated by the President Donald Trump administration, which is expected to create risks for global trade.

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