Think tank revises Taiwan GDP growth estimate down to 6.37%

Asian Economic News, Nov 13, 2000

TAIPEI, Nov. 7 Kyodo

A leading Taiwan economic think tank Tuesday revised downward, to 6.37%, its 2000 economic growth forecast for the island from its July forecast of 6.45%, citing the prolonged stock market slide and sluggish private consumption.

The Taiwan Institute for Economic Research (TIER) expects gross domestic product (GDP) to grow by 6.01% next year.

TIER head Wu Rong-i said the island's economy grew 7.92% in the first quarter, but growth slowed to 5.43% in the second quarter, mainly due to the downward course of the local stock market.

He said growth prospects in the second half of the year are affected by rising oil prices, concern over the longer term outlook for the electronics industry, the backbone of the island's economy, and increasing reluctance by bad debt-saddled financial institutions to extend new loans.

TIER's downward revision falls in line with pessimistic outlooks from other think tanks as well.

The Chung-hua Institution of Economic Research last month also revised its GDP forecast for the year down to 6.41%, citing the bad performance of the local bourse, a slowdown in consumer spending, a decline in domestic investment and a shrinking trade surplus.

It forecast just 6.1% GDP growth next year.

The Institute of Economics at Taiwan's top research institution Academia Sinica estimates GDP growth to reach 6.3% this year.

The research institutes' latest GDP growth rate forecasts are somewhat below the government's 2000 forecast of 6.57%. However, the government's chief statistician is expected to announce a downward revision to 6.49% for 2000 later this month.

The government forecast for 2001 is also expected to be markedly lowered to 6.18% from the previous 6.48%.