The Chung-Hua Institution for Economic Research (CIER), one of the leading think tanks in Taiwan, on Tuesday lowered its forecast for the nation’s 2022 GDP growth to 3.56 percent, due mainly to concerns over inflation and the fallout from COVID-19 on the domestic economy.
“Taking into consideration rising inflation and the impact of the COVID-19 pandemic on private-sector consumption in the second half of the year,” CIER revised downward its forecast for Taiwan’s economic growth this year from 3.96 percent estimated in April, CIER President Chang Chuang-chang (???) told a news conference.
He went on to say that CIER has also adjusted its Consumer Price Index (CPI) forecast from year-on-year growth of 2.56 percent this year to 3.11 percent.
The ongoing Russia-Ukraine war has sharply pushed up the price of energy and food, Chang said.
With global supply chains remaining largely blocked, commodity prices in major countries continue to rise, Chang said, noting that due to rises in the price of imported goods, the Wholesale Price Index (WPI) in Taiwan continued its double digit growth.
CIER has projected Taiwan will see 13.57 percent WPI growth in 2022, raising annual CPI growth to 3.11 percent, the economist said.
Chang predicted Taiwan’s CPI would grow by over 3 percent year-on-year in July and for the whole of the year, with crude oil prices and the length of the Russia-Ukraine war major factors in the long term.
The CIER’s lowering of Taiwan’s 2022 GDP growth echoed the forecast by Academia Sinica a day earlier.
The institution cut its forecast for Taiwan’s GDP growth in 2022 from 3.85 percent issued late last year to 3.52 percent, due to the changing political and economic situation at home and abroad.
The downward adjustment was made because of mounting pressure on the domestic economy in the second half of the year, despite Taiwan’s booming export and import performance, Academia Sinica research fellow Ray Chou (???) said.
Inflation in the United States is a structural issue and the Russia-Ukraine war could drag on longer than expected, fueling fears about worsening inflation, he added.
On Monday, Academic Sinica also raised its forecast for this year’s CPI growth from 2.04 percent to 3.16 percent, and for WPI growth from 4.04 percent to 11.31 percent due to rising raw material prices and higher electricity rates.
In mid June, the central bank lowered its forecast for Taiwan’s GDP growth this year from 4.05 percent forecast in March to 3.75 percent, while raising its forecast for CPI growth to 2.83 percent.
Source: Focus Taiwan News Channel