TAIPEI: The Chung-Hua Institution for Economic Research (CIER) yesterday forecast the economy would grow by 2.24 percent annually next year, from a predicted 0.93 percent this year, suggesting a modest pickup in both domestic and external demand led by markets in developed countries would boost the nation’s recovery.
Its estimate comes even though companies in a variety of sectors have forecast weakening profits for the first half of next year compared with the second half of this year, the Taipei-based think tank said.
“We expect GDP growth to be stronger next year on the back of an improving global economy,” CIER researcher Peng Su-ling said.
The global economy is estimated to grow 2.9 percent next year, an increase from this year’s projected 2.6 percent, CIER said, citing international research bodies.
Exports — the main driver of the nation’s growth — are expected to grow 2.93 percent to NT$2.89 trillion (US$87.4 billion) next year, compared with a downturn of 10.37 percent this year, CIER said.
Firms that supply well-known international technology brands might benefit from the launches of new-generation devices in the second half of next year, and the Internet of Things might also bring business opportunities as applications mature, Peng said.
Imports — much of which stem from export demand — could edge up 1.32 percent to NT$2.2 trillion next year, compared with a projected slump of 16.4 percent this year, as price disruptions caused by cheaper global crude prices wane, but do not disappear, the institute said.
Mineral, chemical and plastic products, which account for 20 percent of total outbound shipments, would continue to suffer, as customers remain conservative about inventory replenishment until crude costs bottom out, the institution said.
Private consumption is expected to inch up 1.92 percent next year, slowing from an estimated 2.54 percent pickup this year, the institute said, with the job market lending further support, despite consumers tightening their belts somewhat.
Most companies in the manufacturing and service sectors plan to hire more employees, although they believe revenue and profit are set to trend downward from now, based on current business visibility, CIER said in a separate report.
The institution sees a business outlook index of 49.6 for the manufacturing industry for the first half of next year and 46.6 for the service industry, CIER president Wu Chung-shu said.
Values above 50 suggest expansion, while those below the halfway mark indicate a contraction.
The index on profitability forecasts registered 43.1 for producers and 44.5 for service providers in the coming six months, the report said.
However, the employment gauge was 52.1 for manufacturers and 56.3 for service providers in the first half of next year, the report said.
“The findings show that the job market could emerge from this global slowdown unharmed, unlike the turmoil following the 2008-2009 economic meltdown,” Wu said.
The central bank might hold policy interest rates unchanged at 1.75 percent at its quarterly board meeting on Thursday, Standard Chartered Bank Taipei-based economist Tony Phoo said.
