GDP growth is expected to be above 7%: minister

UNAFFECTED: Institutions remain optimistic about the economy, given its shift toward the AI industry, as the Middle East war has limited impact on AI development Taiwan’s economic growth is still expected to be higher than 7 percent this year if the Middle East war ends soon, National Development Council (NDC) Minister Yeh Chun-hsien (葉俊顯) said yesterday, citing the latest GDP growth forecasts by seven institutions.Four forecast GDP growth above 8 percent, one predicted 7.28 percent, and two projected 6.92 percent and 6.22 percent, Yeh said at a news conference following an Executive Yuan meeting in Taipei.“Economic growth this year should not differ significantly from the Directorate-General of Budget, Accounting and Statistics’ [DGBAS] forecast of 7.71 percent,” he said.The seven institutions include the central bank and Goldman Sachs Group Inc, Yeh added. They remain relatively optimistic about the economy, mainly because the nation’s export structure has shifted toward the artificial intelligence (AI) industry, and the Middle East war has a relatively limited impact on AI development, he said, adding that it was “unlike the oil wars of the 1980s, when Taiwan’s exports focused more on petrochemical products.” Regarding inflation outlook, the seven institutions forecast the consumer price index (CPI) could rise between 1.5 percent and 1.91 percent this year, Yeh said. The central bank predicted CPI would rise 1.8 percent this year.Headline inflation rose 1.33 percent in the first two months after seasonal adjustments, the DGBAS said last month. The agency is scheduled to update its CPI data on Wednesday next week.Based on information collected from the DGBAS and the central bank, inflation is expected to be below 1.5 percent in the first quarter and remain below the 2 percent alert level for the whole year, if the government’s price stabilization mechanism works smoothly, Vice Premier Cheng Li-chiun (鄭麗君) said at the news conference.The conflict in the Middle East is impacting global energy supplies and market confidence, and exacerbating volatility in financial markets. From March 2 to Wednesday, Taiwanese stocks fell by about 6.3 percent, lower than the 8.68 percent drop in Japanese stocks and the 12.26 percent decline in South Korean equities, indicating that the nation’s financial markets are relatively stable, Cheng said.The government would continue to closely monitor the development of the war in the Middle East, and its impact on the domestic economy and inflation, and take subsequent policy adjustments when necessary, Cheng added.