A local think tank has lowered its forecast for Taiwan’s GDP this year to 1.57%. The think tank -- Taiwan Institute of Economic Research (TIER) – released the new figure on Monday.
TIER’s GDP projection is 0.27 percentage points lower than what it predicted in November. Other indexes, such as domestic consumption, government investment, and exports and imports, also went down.
TIER said several factors have cast a shadow on the local economy, including falling oil prices, the US economy’s performance following interest rate hikes, the economic slowdown in China and ASEAN, as well as political instability in the Middle East. On the domestic front, there is also concern about the impact that a transitional government will have on the economy, with the new government not slated to take office until May. TIER economist Gordon Sun explains.
“[We] are now in a transitional period between the old and new administrations. In the past, the elections were held in March and there were only two months before the [new administration] took office in May. But the economy was in pretty good shape in 2000 and 2008, so the [transition] had little impact," said Sun, "However, there are so many variables in the international community this year and the local economy is not doing well. With a transition period lasting four months, we are really concerned about whether Taiwan’s economy will falter, as the current administration is a caretaker government and the new administration has no experience.”
TIER also dropped its forecast for this year’s Consumer Price Index (CPI) to 0.71%, due to falling oil prices and a gloomy economic outlook.