TAIPEI–Taiwan will have trouble reaching 4.5 percent GDP growth for 2011 because of adverse economic conditions at home and abroad, an economist with a local think tank predicted Sunday.
Taiwan Research Institute President Wu Tsai-yi said suspensions of plants in Formosa Plastics Group’s naphtha cracking complex, Europe’s debt problems, and economic stagnation in the U.S. were among the factors that led him to adjust downward his 2011 GDP forecast from the previous 5 percent.
Wu said the government’s statistics agency lowered its 5-percent growth forecast to 4.81 percent in August, but the adverse impact of a string of fires at Formosa Plastics Group’s petrochemical complex had not yet become evident at the time.
The suspension of a number of facilities at the complex for safety checks and maintenance following the fires, which has taken a bite out of the group’s sales, could cost Taiwan 0.3 percentage points in GDP growth in 2011, he said.
European debt problems have caused weakening global demand and thus directly affected Taiwan, an economy heavily dependent on exports, Wu said.
At the same time, Taiwan has not been able to isolate itself from the turmoil seen in global stock markets in recent months, Wu said, resulting in lower capital gains for Taiwanese investors and slumping consumer confidence that could drive down consumption.
“I would say that the next round of GDP growth forecasts, to be made at the end of October, will be between 4.3 percent and 4.5 percent,” Wu said.
Meanwhile, Hu Sheng-cheng, an academician with Taiwan’s top research institution, Academia Sinica, predicted that the country’s economic growth is “very likely” to be lower than 4.5 percent this year, given a decline in Taiwan’s export of high technology products, slower private investment and weakening consumer spending.