Although factors that are disadvantageous to the international economic situation continue to be present (for example, the European debt crisis, a weak US job market, the impact of the March 11 earthquake on Japan, Mainland China’s tightening economic policy against inflation, etc) the global economy overall has continued to expand and the International Monetary Fund (IMF) estimates 4.3% global economic growth in 2011. In terms of the domestic economic situation, leading economic indicators point to a steady growth of the domestic economy. The Institute of Economics at Academia Sinica has adjusted upwards the 2011 real GDP growth rate from the estimated 4.7% in the end of last year to 5.52%.
    In terms of private consumption, steady growth of the domestic economy has helped restore consumer confidence. Furthermore, the improvement of the job market and the effect of salary adjustments have helped increase spending. Taiwan’s estimated annual growth rate of real private consumption will reach 4.05%. Private investment benefits from cross-strait economic exchanges and Japan’s earthquake reconstruction and is thus expected to grow steadily and continuously. According to the analysis of the Ministry of Economic Affairs, the total amount of new major investments made in the first quarter of this year exceeds the average of the last few years. The investment amount made by Taiwanese businessmen in the first five months of this year has reached 56% of the target investment. The estimated growth rate of the real private investment of Taiwan in 2011 will reach 5.72 %. In terms of foreign trade, although the demand in Europe and America is declining, the emerging economies led by the nations in the Asia-Pacific region are growing rapidly. Favorable factors such as the reconstruction needs of Japan and free traveling of Chinese in Taiwan are helping to improve Taiwan’s import and export momentum. Taiwan’s estimated annual growth rate of real goods and services export will reach 8.52%. Also, estimated Taiwan’s annual growth rate of real goods and services import will reach 4.79%.
    According to the statistics of the Directorate-General of Budget, Accounting and Statistics, the number of workers hired by the industrial sector and service sector at the end of this April is 3.34% higher than the same period last year; also, the real average wage in January – April this year is 2.75% higher than the same period last year. The unemployment rate in this May dropped to the level of 4.27%. It is significantly lower than that of advanced industrial countries. However, compared to the 3.5% of Hong Kong, 3.3% of Korea, and 1.9% of Singapore, it is outperformed by the other three nations of the “four little economic dragons.” Proactive and groundbreaking government policies are needed for Taiwan’s economic recovery to be shared by all.
    In terms of price, as governments around the world are beginning to adopt austerity policies, the trend of soaring international crude oil and raw material prices has eased; therefore, the expected inflation remains within reasonable limits. The annual growth rate of Taiwan’s Consumer Price Index in 2011 is expected to grow slightly from 0.96% in 2010 to 2.16%. Also, the annual growth rate of Wholesale Price Index in 2011 is expected to drop from 5.46% in 2010 to 3.71%. In terms of money supply, stable domestic economic performance and sufficient domestic capital funds will help stabilize the growth rate of money supply in 2011. The 2011 annual growth rate of narrow money supply, M1B, and broad money supply, M2, is 9.56% and 6.01%, respectively.
    In conclusion, it can be expected that Taiwan’s macro-economy, domestic and foreign demand will be as strong as the year before with 5.52% growth in GDP due to the steady growth of domestic consumption and investment, rapid growth of emerging economies in the Asia-Pacific region, expanded cross-strait trade, and order transfer effect resulting from Japan’s earthquake. Taiwan’s GDP growth rate in 2011 may reach 6.5% if there is debt relief in Europe, economic recovery in the USA and in Japan, and effective control of inflation in China in the second half of this year. The 50% interval forecast of this year is 4.27% – 6.91 % with uncertainties included in consideration. Looking ahead, the powerful and forward-looking financial policies of the government will help Taiwan maintain high economic growth and long-term prosperity.

For more information, please refer to the website: http://www.econ.sinica.edu.tw/reports.php?level1=0&level2=0&level3=0&level4=0&parentID=0&menuID=0&pn=1&od=desc&pf=1