Taipei, March 11 (CNA) Taiwan's central bank is planning to raise its forecast for gross domestic product (GDP) growth in 2021 from the 3.68 percent predicted in December, Central Bank Governor Yang Chin-long said Thursday.
During a hearing at the Legislature, Yang was asked to comment on a decision by the Directorate General of Budget, Accounting and Statistics (DGBAS) to raise its 2021 growth forecast by 0.81 percentage points to 4.64 percent in February.
In response, Yang said that the central bank is also planning to upgrade its annual GDP forecast during a quarterly policymaking meeting scheduled for March 18.
Asked if the strong economic forecast will affect interest rates, which are now at a historic low of 1.125 percent, Yang said the bank's decision will consider both GDP growth and inflation, the latter of which remains at a "moderate" level.
Looking beyond Taiwan, the central bank is currently monitoring four potential risks that could complicate expectations that the global economy will recover in 2021, according to Yang.
He was referring specifically to the coverage and efficacy of COVID-19 vaccines, the pandemic's potential to exacerbate existing weaknesses in global economics and finance, risk aversion leading to a rapid contraction of financial markets, and continuing uncertainties surrounding global trade, all of which could hamper growth prospects for this year.
During the hearing, Yang also acknowledged that there is a "definite possibility" that the United States will label Taiwan as a currency manipulator in a report that the U.S. Treasury Department is due to release in April.
In the department's previous report, in December 2020, Taiwan was one of three countries -- along with India and Thailand -- to be added to a currency manipulation watchlist.
The biannual report identifies a country as a currency manipulator if it has a bilateral trade surplus with the U.S. of at least US$20 billion, a current account surplus in excess of 2 percent of GDP, and has engaged in persistent, one-sided intervention in the foreign exchange market.
At the time, Taiwan met the first two of these criteria, and recently reported currency interventions by the central bank last year have raised speculation that it now also meets the third condition.
Yang, however, said that if Taiwan is indeed cited in the report, it will communicate to the U.S. that its large and growing trade surplus is mainly the result of strong U.S. demand and not related to foreign exchange rates.
Even if Taiwan is labeled a currency manipulator, the designation is unlikely to affect the country's economic growth prospects, he added.
