The Chung-Hua Institution for Economic Research (CIER) on Thursday trimmed its forecast for Taiwan’s 2022 GDP growth to 3.28 percent, citing high inflation in major countries and downside risks in the global economy.
The latest forecast was slightly lower than the 3.56 percent growth projected in July by CIER, one of the leading think tanks in Taiwan.
CIER President Chang Chuang-chang (張傳章) said at a news conference that while the think tank had lowered its forecast, it was worth noting that Taiwan’s economic growth had exceeded 3 percent for the past four years, which was not a bad performance.
Domestically driven
The forecast 3.28 percent growth this year will be driven mainly by domestic demand, which is expected to contribute 2.8 percentage points, while foreign demand is likely to account for only 0.48 percentage points, due to the global economic slowdown, Chang said.
Meanwhile, higher commodity prices resulting from the Russia-Ukraine war has fueled inflation in many countries, which has driven up the prices of imported goods, he said.
Based on those factors, CIER has projected that the wholesale price index in Taiwan will rise 12.79 percent this year, according to Chang.
The think thank has also forecast that Taiwan’s consumer price index will increase by 3.02 percent this year, he said.
Global economic environment
As a small open economy, Taiwan is susceptible to changes in the international economic environment, but in general, its economic performance remains solid, Chang said.
If end-user demand fails to pick up, however, Taiwan will be unlikely to see any significant growth in exports, he said.
The domestic economy may be affected this year and into 2023 by several uncertain factors, including a looming global debt crisis, the monetary policies adopted by major countries to fight inflation, China’s policies in response to domestic and foreign issues, and other geopolitical risks, Chang said.
2023 forecast
In light of those factors, CIER has forecast Taiwan’s 2023 GDP growth at 2.81 percent, similar to the International Monetary Fund’s projection of 2.8 percent growth, Chang said.
The country’s quarterly economic growth in 2023 is estimated at 0.97 percent, 2.5 percent, 3.34 percent and 4.27 percent, respectively, according to CIER.
In terms of the foreign exchange rate, CIER has forecast that the Taiwan dollar will average NT$29.84 against the U.S. dollar this year, a 6.5 percent depreciation year-on-year.
The Taiwan dollar fell against the greenback on Wednesday to the lowest level in more than five years, breaking the NT$32.00 mark.
Source: Focus Taiwan News Channel