Sunday, December 18, 2011

Taiwan's economic prospects in 2012

* Looking ahead to 2012, Taiwan government has made a rather optimistic forecast of the gross domestic product (GDP) to grow 4.3 percent. But many private research institutions have put up growth projections ranging from 3.3 to 3.7 percent next year.

* On the other hand, some expect Taiwan’s economy to turn around in March 2012, but there is limited evidence to support such an assertion since outlook for the European and US markets remain uncertain.

* Depending on a number of internal and external factors, particularly the results of the January elections and developments in cross-Strait relations, it remains possible for Taiwan’s GDP to meet, or possibly exceed, government expectation.

* However, based on the fact that leading economic indicators, released by the Council for Economic Planning and Development (CEPD), have been declining for six months in a row, the government agency has downgraded the economy to a yellow-blue light, which represents sluggishness for three consecutive months.

* At the same time, with consumption expected to grow 3.5 percent and private investment at 5 percent next year, domestic demand will contribute 55 percent to next year's GDP and exports only 45 percent. As such, the likelihood for Taiwan’s Central Bank to lower rates during its upcoming board meeting at the end of December remains high.

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