Taiwan’s economic outlook for 2024 appears promising, with the Taiwan Research Institute (TRI), a leading economic think tank, forecasting a robust gross domestic product (GDP) growth of 3.18 percent.
The TRI’s recent economic forum shed light on key factors contributing to this optimistic projection, including improved export performance and a rebound in private investments. This article explores the TRI’s insights, providing a comprehensive overview of Taiwan’s economic landscape for the coming year.
Factors Driving Taiwan’s Economic Growth:
Export Performance: The TRI anticipates a significant boost in Taiwan’s export sector in 2024, with merchandise and services exports expected to grow by 6.08 percent. This positive trend follows a contraction of 3.80 percent in 2023 attributed to weak global demand, high inflation, and aggressive rate hikes by major central banks. The expected rebound is a crucial driver of the overall economic growth.
Private Investments: A key contributor to Taiwan’s economic resilience in 2024 is the projected rebound in private investments. The TRI forecasts a 2.14 percent growth in private investments, countering the anticipated fall of 9.96 percent in 2023. The recovery is attributed to a relatively low comparison base over 2013, prompting manufacturers to scale back their expansion plans amid weak global demand.
Government Encouragement for Private Sector: TRI founder Liu Tai-ying highlighted Taiwan’s challenge of a savings glut and recommended government measures to encourage increased private sector investments. This not only includes investments in private projects but also extends to public works, presenting a comprehensive approach to stimulate economic growth.
Economic Forecasts:
2023 GDP Growth Adjustment: The TRI adjusted its GDP growth forecast for 2023, lowering it by 0.04 percentage points to 1.45 percent. This adjustment is attributed to weak global demand, high inflation, and the impact of aggressive rate hikes by major central banks, affecting Taiwan’s exports.
2024 GDP Growth: With improved export performance and rebounding private investments, Taiwan is poised to achieve a GDP growth of 3.18 percent in 2024. The think tank’s forecasts align with the government’s expectations, reflecting a positive consensus on the country’s economic trajectory.
Quarterly GDP Growth: The TRI provides a quarterly breakdown of GDP growth for 2024, projecting 5.78 percent in the first quarter, 3.76 percent in the second, 2.59 percent in the third, and 0.97 percent in the fourth. These figures offer insights into the expected trajectory of economic growth throughout the year.
Challenges and Uncertainties:
Savings Glut Challenge: Liu Tai-ying emphasizes Taiwan’s savings glut as a major challenge. While economic improvements are expected, addressing this issue requires concerted efforts to encourage private sector investments and strike a balance in the overall economic landscape.
Global Economic Impact Factors: Uncertainties persist regarding global issues that may influence Taiwan’s economic performance. These include climate change-related challenges, tensions between the United States and China, presidential elections in Taiwan and the U.S., and China’s stance towards Taiwan’s new government post-election.
Conclusion:
Taiwan’s economic prospects for 2024 appear optimistic, as outlined by the Taiwan Research Institute. The anticipated GDP growth of 3.18 percent is underpinned by improved export performance, a rebound in private investments, and prudent government measures. While challenges and uncertainties persist, the alignment of the TRI’s forecasts with the government’s indicates a shared confidence in Taiwan’s economic resilience and growth potential in the coming year.
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