TAIPEI (TVBS News) — Academia Sinica's Institute of Economics released its latest 2024 Taiwan Economic Forecast on Wednesday (July 31), revising the 2024 real economic growth rate upward to 3.88%, from 3.02% last year.
Driven by a resurgence in global merchandise trade and high demand for advanced technologies like high-performance computing and artificial intelligence (AI), Taiwan's annual real GDP growth rate hit 6.56%.
Consumer enthusiasm played a significant role in this growth. Real private consumption saw a 4.45% increase, fueled by dining, accommodations, leisure, and transportation. Retail sales in automotive, diversified goods, and e-commerce also grew by over 4% in the first half of 2024, with total revenues rising at an annual rate of 3.24%.
The catering industry experienced a 5.10% growth due to strong demand for dining out and airline catering. Government tax reforms have further boosted household disposable income and consumption, contributing to a projected 2.62% growth rate in private consumption for 2024. However, businesses remained cautious amid global economic uncertainties, resulting in a 7.92% decrease in real private investment growth in the first quarter.
Despite a 25.66% reduction in domestic fixed asset acquisitions in the manufacturing sector, investments in advanced technology supply chains are expected to boost private investment later this year.
The forecasted real annual growth rate for private investment in 2024 stands at 0.86%. Ongoing infrastructure investments by the government are projected to increase the real annual growth rate of gross fixed capital formation to 2.16%.
Exports showed a remarkable 9.11% growth rate in the first quarter, driven by strong demand for AI and high-speed computing. The export growth rate for information, communication, and audio-video products surged by 117.63%. The expected growth rates for exports and imports of goods and services for 2024 are 8.48% and 8.23%, respectively.
Inflation remains a concern, with the Consumer Price Index (CPI) rising by an average of 2.27% from last year. The CPI is projected to increase by 2.21% in 2024, influenced by rising housing prices and salary increases for public-sector staff. The vibrant service sector has boosted employment opportunities, resulting in an average unemployment rate of 3.36% for the first half of the year.
Significant uncertainties loom for the second half of the year, including the timing of monetary policy tightening in major economies and geopolitical risks. The estimated 50% confidence interval for Taiwan's real GDP growth rate for 2024 ranges from 2.49% to 5.26%.