Taipei, Jan. 24 (CNA) The Chung-Hua Institution for Economic Research (CIER), a leading Taiwanese think tank, has raised its forecast for Taiwan's gross domestic product (GDP) growth for 2024, partly due to a rebound in private investment.

At a forum hosted by the CIER on Taiwan's economic outlook for 2024, the think tank forecast 3.10 percent GDP growth in 2024, up 0.07 percentage points from its previous estimate of 3.03 percent made in October.

The revised 2024 growth forecast signaled improving fundamentals from 1.41 percent growth the CIER expected for 2023, when Taiwan's export-oriented economy was hurt by weakness in global demand, pushing exports lower and hurting companies' willingness to invest.

Though the CIER revised its latest forecast upwards, the CIER remained more cautious than the government, as the Directorate General of Budget, Accounting and Statistics (DGBAS) predicted in November that Taiwan's GDP growth will hit 3.35 percent in 2024.

CIER President Yeh Chun-hsien (葉俊顯) said at the forum that after major central banks aggressively raised interest rates over the past two years, they could change course this year and start to cut rates if the world economy remains sluggish.

Rate cuts should help companies lower their debt burdens and accelerate the pace of fundraising for investments, Yeh said.

With the government pushing for deeper cuts in carbon emissions, greater energy efficiency, and an increase in rural renewal projects, the private sector is also expected to pour funds into these areas this year, Yeh said.

As a result, the CIER has forecast that private investment in Taiwan will grow 1.34 percent in 2024, a significant rebound from an estimated 8.41 percent decline in 2023.

Fixed capital formation in Taiwan is expected to grow 3.12 percent in 2024, compared with an expected 6.44 percent fall in 2023.

Yeh said Taiwan's exports should benefit from a relatively low base of comparison in 2023 and a rebound in global demand to grow in 2024.

According to the CIER, Taiwan's merchandise and service exports are expected to grow 4.60 percent in 2024, up from an estimated 4.00 percent decline in 2023, while imports are expected to grow 4.33 percent in 2024, after an expected 4.30 percent decline in 2023.

Yeh said private consumption is expected to continue to grow in 2024 in the post COVID-19 era by 2.08 percent, but that will fall from an expected 8.38 percent increase in 2023 that benefited from pent-up demand during the pandemic.

Based on the forecasts, Yeh said Taiwan should experience a mild improvement in both external and domestic demand this year.

While Taiwan's economy is likely to rebound in 2024, CIER said it could still face uncertainties, such as shifts in the monetary policy of major countries, China's long-term economic growth, ties across the Taiwan Strait, the speed of inventory adjustments in global supply chains, and geopolitical tensions.

In particular, the think tank said, 2024 is an election year in 76 countries in the world, including the presidential vote in the United States in November, which has sowed the seeds of uncertainty in the global economy.

In Taiwan, there are rising concerns that China will expand the suspension of tariff concessions or cancel tariff concessions completely under the Economic Cooperation Framework Agreement (ECFA) after the pro-independence Democratic Progressive (DPP) won the president election on Jan. 13.

On Dec. 21, 2023, China's Customs Tariff Commission announced it was suspending preferential tariffs on 12 petrochemical products, including propylene and paraxylene, citing trade barriers imposed by Taiwan on similar products.

Also attending the CIER forum, Chiou Jiunn-rong (邱俊榮), an economics professor at National Central University, said he did not expect China to further suspend tariff concessions in the short term as both sides need time to monitor each other after the election.

But Taiwan's economy is faced with growing uncertainties, he said, resulting from fears over the cancellation of preferential tariffs under the ECFA.

The ECFA, signed in 2010 when Taiwan was under the Kuomintang administration of then-President Ma Ying-jeou (馬英九), included an "early harvest" list for tariff concessions covering 557 Taiwan exports to China and 267 Chinese products bound for Taiwan.

Cheng Cheng-mount (鄭貞茂), chairman of Yang Ming Marine Transport Corp., said at the forum that other geopolitical issues could also hurt the global economy.

In addition to a war between Russia and Ukraine, the shipping crisis in the Red Sea resulting from attacks on commercial vessels by Houthi militants could create inflation in the wake of interruptions in shipping schedules and in global supply chains.

According to CIER, Taiwan's consumer price index is forecast to grow 1.88 percent in 2024, below the 2 percent alert set by the central bank.

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