The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday increased its projection for GDP growth this year from 4.32 percent to 4.78 percent in response to planned government spending.
“In spite of the global economic slowdown, the new government will make efforts to boost the local economy,” DGBAS Director-General Shih Su-mei (石素梅) told a media briefing.
GNP this year is expected to total NT$13.48 trillion (US$442.6 billion), or US$19,143 per capita, Shih said.
The upward revision of 0.46 percentage points reflects expected contributions from NT$116 billion in government spending in the second half of the year and from Chinese tourists after July, DGBAS Director Tsai Hung-kun (蔡鴻坤) said.
Spending by the central government is expected to grow 10 percent year-on-year to the highest since 1995, Tsai said, adding that the agency had previously predicted a 2 percent contraction.
“It’s very clear that the government intends to boost the economy by spending on a massive scale,” Tony Phoo (符銘財), chief economist of Standard Chartered Bank, said by telephone yesterday.
If 3,000 Chinese tourists entered the country every day starting in July, they could spend a total of NT$25.7 billion if each stayed for a week, the DGBAS said, adding that this would boost this year’s GDP by between 0.15 percent and 0.2 percent, Tsai said.
However, as Beijing has proposed allowing 18 cross-strait flights, or around 1,000 tourists per week, the government does not expect 3,000 tourists per day starting in July.
Tsai said the projected growth in GDP also reflected better-than-expected exports.
The bureau has also revised its forecast for annual export growth to 12.3 percent this year, up from the 6.1 percent estimated in late February.
Tsai said that the nation’s export performance in the first quarter was better than expected and saw little negative impact from the US economic slowdown.
“Signs indicate that the Asian economy may have distanced itself from the US economy, since our exports to emerging Asian countries outperformed those to our US and European export partners,” Tsai said.
Exports to five ASEAN countries, including Vietnam, as well as to India, represented 18.7 percent of total exports in the first quarter, while the US and the EU represented 11.4 percent and 10.9 percent respectively, the DGBAS said.
GDP growth in the first quarter was 6.06 percent, with the consumer price index (CPI) hitting 3.58 percent over the same period, the DGBAS said.
Inflation is expected to continue rising this year, averaging 3.29 percent — the highest inflation since 1996 — as a result of soaring oil and food prices, Tsai said.
Cheng Chen-mount (鄭貞茂), chief economist at Citibank NA (花旗銀行), said yesterday that the government’s upward revision to its GDP forecast was “reasonable” considering the expectations from government spending increased business ties with China.
“Infrastructure spending will be positive for the nation’s economic growth,” Cheng said by phone.
After GDP growth in the first quarter beat the bank’s estimate of 5.2 percent, Cheng said Citibank would raise its GDP forecast for the year from 4.2 percent to 4.4 percent.