The Taiwan Institute of Economic Research (TIER, ???), one of the leading think tanks in the country, said Thursday that the domestic economy will pick up next year, recording 1.65 percent annual growth.
Taiwan, which is expected to show a gross domestic product growth of 1.17 percent this year, will see a better performance next year largely because of higher fixed capital formation and outbound sales, the think tank said.
TIER's 2017 GDP growth forecast of 1.65 percent was more conservative than the government's, which projected 1.88 percent growth.
With the global economy showing signs of improving, TIER said, local semiconductor firms and flat panel suppliers are planning to invest more to expand production capacity to meet rising demand.
As a result, private investments for 2017 are expected to grow 2.08 percent from the estimated 1.80 percent rise in 2016, the think tank said.
When investments by the government and state-owned enterprises are included, Taiwan's fixed capital formation for 2017 would show a 1.98 percent increase, compared with the 1.77 percent growth forecast for 2016, TIER said.
In terms of trade, it said that amid recovering global demand, raw material prices in the global market have been stabilizing to the advantage of export-oriented economies like Taiwan, which are likely to growth in export value in 2017.
Taiwan's outbound sales of merchandise are expected to grow 2.63 percent next year, up from the minus 4.05 percent growth estimated for 2016, while its merchandise imports are expected to grow 3.22 percent, compared with a projected minus 5.03 percent growth this year, TIER said.
Private consumption is also expected to increase in 2017, rising 1.81 percent, although that will be 0.22 percentage points lower than the 2016 forecast, due to stagnant wage growth and a relatively high comparison base this year, the think tank said.
However, Gordon Sun (???), director of TIER's Economic Forecasting Center, cautioned that Taiwan might face rising protectionism by the United States, following the election Wednesday of Republican Donald Trump as president.
During the election campaign, Trump repeatedly blasted globalization, saying it had caused the loss of millions of jobs, and he vowed to bring back jobs to the U.S. Trump also accused Taiwan, China and South Korea of stealing jobs from American workers.
In light of the expected increased protectionism, Sun said, Taiwanese companies should consider investing in the U.S. market and putting down roots there.
On the issue of inflation, TIER projected an annual 1.30 percent rise in the 2017 local consumer price compared with an expected 1.20 percent increase this year.
It also forecast that the wholesale price index will return to a growth pattern next year, rising 1.42 percent, compared with an expected decline of 3.24 percent this year.
Source: Focus Taiwan News Channel