The Yuanta-Polaris Research Institute, one of Taiwan's leading economic think tanks, is now the most bullish of any domestic institution after it raised its forecast of the country's 2021 gross domestic product (GDP) growth for 2021 to 6%.
The upward revision, released Wednesday, resulted from robust private investment and Taiwan's strong export performance driven by high global demand for tech gadgets.
In the latest forecast, Yuanta-Polaris raised its forecast of Taiwan's GDP growth by 1.6 percentage points from its previous estimate made in March to 6 percent.
The forecast topped the 5.88 percent growth projected by the Directorate General of Budget, Accounting and Statistics, 5.75 percent growth forecast by Taiwan's central bank, and 5.40 percent growth expected by the Taiwan Institute of Economic Research.
The Chung-Hua Institution for Economic Research and Academia Sinica have forecast 2021 GDP growth of the 5.16 percent and 5.05 percent, respectively.
The think tank has also forecast Taiwan's 2022 GDP growth at 3.20 percent.
Yuanta-Polaris President Liang Kuo-yuan (???) said Taiwan's exports showed sustained growth momentum, led by the semiconductor industry, and have been a main pillar of the country's GDP growth.
The think tank raised its forecast for 2021 export growth to 18.10 percent, up from a previous estimate of 5.16 percent, and raised its estimate for import growth to 18.05 percent, from a previous 3.97 percent.
In the third and fourth quarters this year, exports are expected to grow 16.77 percent and 12.50 percent, respectively, Yuanta-Polaris said.
To meet vibrant global demand, Liang said, many export-oriented manufacturers have been keen to expand their production capacity and upgrade their technologies, leading to an increase in private investment this year.
As a result, Yuanta-Polaris has raised its forecast for Taiwan's private investment growth for 2021 to 11.90 percent from an earlier estimate of 4.07 percent, and capital formation is expected to grow 9.52 percent, up from the previous estimate of 3.66 percent.
Taiwan's economy has been in an uneven growth mode, however, and despite the sharp rise in exports, local demand has been hurt by an outbreak of domestically transmitted COVID-19 cases in mid-May, the think tank said.
According to Yuanta-Polaris, Taiwan's private consumption is expected to grow only 1.09 percent in 2021, a downward revision from a previous estimate of 3.73 percent growth.
Liang said weakening private consumption has affected the local service sector and hurt the job market.
"This unbalanced economic growth has me worried," he said.
Yuanta-Polaris said Taiwan's consumer price index (CPI) and core CPI, which excludes vegetables, fruits and energy, are expected to grow 1.77 percent and 1 percent, respectively, in 2021.
The stable CPI growth means it is unlikely that the central bank will raise its key interest rates this year.
Last week, the central bank concluded a quarterly policymaking meeting, leaving interest rates unchanged for the sixth consecutive quarter.
Source: Focus Taiwan News Channel