The Chung-Hua Institution for Economic Research raises 2007 growth estimate to 4.55 percent

The China Post news staff

TAIPEI, Taiwan — Taiwan is expected to achieve a slightly higher economic growth rate of 4.55 percent in 2007 and another gain of 4.41 percent for 2008, according to the latest forecast by the Chung-Hua Institution for Economic Research (CIER), released yesterday.

The government-funded think tank adjusted the 2007 growth rate upward by 0.29 percentage point from its previous forecast of 4.26 percent made in July.

The brighter growth forecast for the year is based mainly on the expectation that the domestic economy will expand in the second half of the year at the same pace registered in the first half year, said Wang Li-jung, director of the CIER Forecast Center.

Benefiting from the steady recovery of the world market and brisk economic performance at home, the growth posted in the first half-year was better than anticipated, said Wang.

In the period from January to June this year, consumption in the private sector expanded 3.4 percent over the year-earlier level. Investment in the private business sector gained 4.46 percent, a growth rate much higher than that posted in government and official sectors.

CIER researchers forecast that Taiwan’s overall economic growth will top 4.52 percent in the fourth quarter, with consumption and investment in the private sector growing at a rate slightly slower than in Q3.

Two-way trade is expected to perform better in the final quarter of the year. Peng Su-ling, a deputy researcher with the CIER Forecast Center, said the center decided to adjust upward the 2007 economic growth forecast to 4.55 percent also because of better-than-expected domestic investment in the second quarter.

In Q2, Peng said, local investment in capital goods soared by 20 percent, with investment in semiconductor and TFT-LCD flat-panel manufacturing industries pacing the increase. The overall private-fixed investment is stronger than previously expected and will rise 5.82 percent this year, more than double the July 20 forecast of 2.20 percent, the research institute said. Merchandise export growth was upgraded to 8.54 percent from 7.86 percent and the merchandise import forecast was trimmed to 6.98 percent from 7.22 percent, the institute said. CIER researchers also forecast an economic growth rate of 4.41 percent for next year from an earlier projection of 4.52 percent, slightly lower than the 2007 level, on a lower outlook for private and government consumption.

They forecast that private sector consumption in 2008 will advance 2.91 percent over the 2007 level and that domestic investment will grow 4.94 percent. But the export trade in 2008 will slow down a bit compared to 2007, mainly as a result of lower demand in the world market. Yet the import trade will be better than in 2007, due to greater demand in the domestic market.

The researchers’ estimate for this year’s consumer price index in Taiwan remained unchanged at 1.33 percent.

The forecast for next year’s inflation was raised to 1.98 percent from 1.55 percent.