The China Post news staff
Taiwan’s GDP growth is expected to rise 10 percent this year before returning to a normal pace of 4.2 percent in 2011 and 5 percent in 2012, according to a forecast by the Citibank Taiwan released yesterday. Citi expressed cautious optimism about the world’s economy next year, said Citi chief economist Cheng Cheng-mount during a press conference to unveil the global economic outlook in 2011. The economy worldwide in 2011 will maintain this year’s strong momentum with different ranges of growth across regions, according to Citi’s research report. It upgraded its growth estimates for major countries such as the U.S., the Euro Area, Japan and China, as well as emerging markets. Overall, Citi forecasted the global economy to expand by 3.4 percent in 2011 and 3.8 percent in 2012. Although the growth rates are slightly lower than 3.9 percent in 2010, the macro environment performed better than the previous economic cycle due to strong growth in emerging markets. Citi forecast that the U.S., the world’s largest economy, will see a growth rate of 2.5 percent in 2011, slightly lower than this year’s 2.7 percent. Corporate investment and private consumption will both surge, while government spending and growth of imports and exports will slow down.
Seriously affected by the sovereignty debt crisis this year, the eurozone’s GDP growth will slide to 1.4 percent in 2011, from 1.6 percent this year. The sovereignty debt crisis will remain a major challenge in 2011, Citi forecasted. Government debt in Greece, Ireland and Portugal might face restructuring. In Asia, except for Japan’s mild growth at 1.4 percent, all the other nations maintain robust growth due to continued increases in private investment and consumption, as well as infrastructure construction. Driven by the two major emerging countries — China and India — Asia will gradually dominate the global economy within the next decade, Citi projected. Citi believed that China is likely to replace the U.S. between 2020 and 2025 to be the largest economy in the world, and India might overtake the UK and France in 2015 economically. A general challenge facing Asian countries in 2011 is the continued inflow of international hot money, which builds up pressure for tightening monetary policies and capital controls. Citi predicted that China’s GDP growth will slightly cool down to 9.2 percent next year, from this year’s 10 percent. China’s economy has expanded by over 8 percent per annum for 20 consecutive years. Next year, it will focus on economic transformation and balancing the growths of quality and quantity, including boosting household income, accelerating urbanization, relaxing relevant regulations in the service sector and price controls. In Taiwan, domestic demand, such as private consumption and investment, will be the major growth factors next year when exports slow down. Cheng revised upwards his projection for Taiwan’s GDP growth this year to 10 percent. He also predicted that the economic expansion will ease off in the first half of next year before the growth momentum picks up in the second half, leading the growth rate for the entire 2011 to return to a normal pace of 4.2 percent. In 2012, the strength continues with the GDP growth climbing up to 5 percent. As Taiwan’s commodity prices are relatively stable compared with neighboring countries, Citi believed that the central bank will gradually relax its tightened monetary policies in 2011 and accelerate the pace in 2012 with the economy continuously picking up.