The Chung-Hua Institution for Economic Research (CIER) has raised its forecast for Taiwan's economic growth in 2020 to 1.77 percent because of a pickup in economic activity as COVID-19 fears ease and spending vouchers are issued to consumers.
The CIER, one of Taiwan's leading think tanks, increased its baseline growth forecast for 2020 growth to 1.33 percent Wednesday, from 1.03 percent in April, because of higher expectations for economic activity in the fourth quarter.
The injection of NT$50 billion into the economy through spending vouchers that took effect on July 15 should add another 0.44 percentage points to 2020 growth, the CIER estimated.
CIER President Chang Chuang-chang (張傳章) said the think tank had not taken the spending vouchers into account in previous growth forecasts, which is why it separated its estimate Wednesday into a baseline estimate and one that includes the vouchers.
He said the vouchers could help boost domestic demand and economic activity at home as COVID-19 continues to hurt global demand.
The CIER said the best case growth scenario was 1.98 percent if the stock market continued its rise and turnover remained strong, which would create additional wealth and boost stock transaction taxes, which are included in GDP growth calculations.
The second quarter will likely be Taiwan's slowest growing quarter this year, with growth of 0.64 percent, followed by 0.89 percent growth in the third quarter and 2.16 percent growth in the fourth quarter, without taking the spending vouchers into account.
In the first quarter, Taiwan's GDP grew 1.59 percent, according to a preliminary estimate by the Directorate General of Budget, Accounting and Statistics.
According to CEIR, Taiwan's private consumption is expected to fall 0.06 percent in 2020, while private investment is forecast to rise 0.25 percent.
Capital formation growth has been pegged at 2.63 percent, and government investment growth is expected to reach 10.90 percent.
Taiwan's export growth in merchandise and services is expected to hit 1.14 percent and import growth is estimated to reach 0.34 percent, according to the CIER .
For 2021, CIER said Taiwan's GDP is expected to grow 2.33 percent, down from an earlier forecast of 2.62 percent.