Nation set for 3.7% GDP growth: TIER

By John Liu ,The China Post

TAIPEI, Taiwan — The Taiwan Institute of Economic Research (TIER, �x�g�|) yesterday tuned up its forecast on the nation’s GDP growth to 3.7 percent this year on the back of greater economic prospects and falling oil prices. The TIER’s forecast is 0.03 percentage points higher than its previous forecast made in January. The TIER projects that both exports and local demand will grow. Low oil prices and economic recovery around the globe already led to a boost in consumer confidence. Imports of consumer goods saw double-digit growth in the first quarter, and there have also been gains in the retail and food sectors. Businesses are expected to step up investment as well. Fixed capital formation by big electronics companies may expand between 5 and 10 percent in 2015. Private investment will rise nearly 6 percent, the TIER said. Looking at the global landscape, the IMF recently made a downward modification of its growth forecast of the U.S. and mainland China, but tuned up expectations for Japan and Europe.

All in all, the world economy is on track for a ��stable growth,�� TIER said. Gordon Sun (�]���w), director of the TIER Macroeconomic Forecasting Center, said three uncertain factors loom over the economy down the road. First, when and by how much will the U.S. Fed hike interest rate. History shows every time the Fed made a rate adjustment, a period of financial turmoil followed, Sun said. The second factor is oil price, for it will affect local firms’ inventory levels. Thirdly, the precipitation that Taiwan receives in the future, as water and utility rationings can hurt business activities, could be a factor.