[Economics] Taiwan Economy to Sustain a Healthy Expansion in 2011: Academia Sinica

[Economics] Taiwan Economy to Sustain a Healthy Expansion in 2011: Academia Sinica (Chinese Version)

Academia Sinica Newsletter (2011/07/19) Although there are still some interfering factors to the disadvantage of the international situation, for example, the European debt crisis to be resolved, weak US job market, earthquake impact on March 11 in Japan, Mainland China’s tightening economic policy against inflation, etc. However, overall, the global economy continues to expand and the International Monetary Fund (IMF) estimates 4.3% global economic growth in 2011. On the other hand, for the domestic economic situation, leading economic indicators are on the rise indicating the steady growth of the domestic economy. We have the 2011 real GDP growth rate adjusted up from the estimated 4.7% in the end of last year to 5.52%.

In terms of private consumption, steady growth of the domestic economy helps restore consumer confidence. Furthermore, the improvement of the job market and the effect of salary adjustments have helped increase spending. Taiwan’s estimated annual growth rate of real private consumption will reach 4.05%. Private investment benefits from cross-strait economic exchange and Japan’s earthquake reconstruction; therefore, it is expected to grow steadily and continuously. According to the analysis of the Ministry of Economy, the total amount of new major investments made in the first quarter of this year exceeds the average of the last few years. The investment amount made by Taiwanese businessmen of the first five months this year has reached 56% of the target investment. The estimated growth rate of the real private investment of Taiwan in 2011 will reach 5.72 %. In terms of foreign trade, although the demand in Europe and America is declining, the emerging economies led by the nations in the Asia-Pacific region are growing rapidly. The favorable factors of reconstruction needs of Japan and free traveling of Chinese in Taiwan are helping to improve Taiwan’s import and export momentum. Taiwan’s estimated annual growth rate of real goods and services export will reach 8.52%. Also, estimated Taiwan’s annual growth rate of real goods and services import will reach 4.79%.

According to the statistics of the Directorate-General of the Budget, Accounting and Statistics, the number of workers hired by the industrial sector and service sector at the end of this April is 3.34% higher than the same period last year; also, the real average wage in January – April this year is 2.75% higher than the same period last year. The unemployed rate in this May dropped to the level of 4.27%. It is significantly lower than the advanced industrial countries. However, compared to the 3.5% of Hong Kong, 3.3% of Korea, and 1.9% of Singapore, it is outperformed by the other three nations of the “four little economic dragons.” It relies on proactive and groundbreaking government policies to have the achievement of Taiwan’s economic recovery shared by all.

In terms of price, as governments around the world are beginning to adopt austerity policies, the soaring international crude oil and raw material prices trend has eased; therefore, the expected inflation remains within reasonable limits. The annual growth rate of Taiwan’s Consumer Price Index in 2011 is expected to grow slightly from 0.96% in 2010 to 2.16%. Also, the annual growth rate of Wholesale Price Index in 2011 is expected to drop from 5.46% in 2010 to 3.71%. In terms of money supply, the stable domestic economic performance and sufficient domestic capital fund will help stabilize the growth rate of money supply in 2011 in which the annual growth rate of narrow money supply, M1B, and broad money supply, M2, is 9.56% and 6.01%, respectively.

In conclusion, Taiwan’s macroeconomy, domestic and foreign demand has optimistic expectations that it will be as brilliant as it was the year before with 5.52% growth in GDP due to the steady growth of domestic consumption and investment, rapid growth of emerging economies in Asia-Pacific, expanded cross-strait trade, and order transfer effect resulted from Japan’s earthquake. Taiwan’s GDP growth rate in 2011 may reach 6.5% if there is debt relief in Europe, economic recoveries in the USA and in Japan, and effective control of inflation in China in the second half of this year. The 50% interval forecast of this year is 4.27% – 6.91 % with the uncertainties included for consideration. Looking ahead, the powerful and forward-looking financial policies of the government will help Taiwan maintain high economic growth and long-term prosperity.

Media Contacts:
Ms. Pearl HUANG, Public Affairs Office, Central Office of Administration, Academia Sinica (Tel)886-2-2789-8820 (Fax)886-2-2782-1551 (M)0912-831-188
Email: pearlhuang@gate.sinica.edu.tw
Ms. Mei-Hui LIN, Public Affairs Office, Central Office of Administration, Academia Sinica
(Tel) +886-2-2789-8821, (Fax) +886-2-2782-1551, (M) 0921-845-234
Email: mhlin313@gate.sinica.edu.tw


Reference:
Academia Sinica Newsletter 2011/07/19

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