Taiwan’s economic growth is expected to bottom out before the end of the second quarter amid a slow recovery of the global economy, a local research institute said Wednesday.
“Taiwan’s GDP has not yet reached bottom,” said Liang Kuo-yuan, president of Taipei-based Polaris Research Institute, on the sidelines of an economic forum in Taipei.
The hikes in electricity and fuel prices have been factored into forecast, he said, adding that the main driver of the country’s industrial output is still the global economy.
“The global economy has passed the most dangerous stage, but is still fragile and is recovering slowly,” Liang said, citing Christine Lagarde, chief of the International Monetary Fund.
Taiwan’s economy will recover along with the global economy, as long as the looming rise in electricity rates and fuel prices do not hurt the country’s export competitiveness, he said.
When manufacturers encounter higher production cost, they tend to raise their product prices, he said.
As for concerns over inflation in Taiwan, Liang predicted that the fuel and electricity price hikes would push inflation near 2 percent, close to the government’s forecast.
However, if the effects of typhoons are taken into account, inflation could surpass 2 percent, he said. -By James Lee