Taiwan’s economy to grow by 3.29% amid inflation concerns

TAIPEI (TVBS News) — The Taiwan Institute of Economic Research (TIER) released on Thursday (April 25) its latest economic growth forecast, stating that Taiwan's GDP will expand by 3.29% this year, higher than the 3.15% estimated in January.

The Consumer Price Index (CPI) is also expected to rise, with an annual increase rate revised from 1.95% to 2.13%, breaking the 2% inflation warning line.

Sun Ming-te, director of the Macroeconomic Forecasting Center at TIER, said that while Taiwan's domestic demand is stable and exports continue to expand, the country must be wary of rising prices due to increased electricity costs and geopolitical risks in the Middle East. These factors could increase oil prices and inflation, putting pressure on domestic import inflation.

TIER also predicted that businesses remain cautious about capital expenditure due to ongoing geopolitical risks and trade frictions. Private investment growth is not as strong as expected, leading to a downward revision in private investment and an upward revision in net foreign demand.

Chang Chien-yi, president of TIER, said that while Taiwan's economy improved in April, traditional industries still need to be observed. He initially thought the annual economic growth rate could be adjusted to a higher than 3.29%. Still, he worries about other variables, such as the potential re-election of U.S. President Donald Trump, which could impact the real economy and affect Taiwan.

Sun also analyzed the fact that the International Monetary Fund (IMF) has revised the global economic growth rate. He said that the U.S. is performing better than expected, but China is underperforming.

Due to persistently high prices in the U.S., interest rate cuts are being delayed and will be fewer than initially planned, Sun said.