Fitch Ratings yesterday sharply revised downward its GDP forecast for the world’s major advanced economies as well as the so-called BRIC countries (Brazil, Russia, India and China), which likely means more bad news for Taiwan.
The ratings agency forecast collective GDP growth of 3.2 percent this year for the BRIC countries, down from 5.7 percent growth projected in November, its latest Global Economic Outlook report showed.
Fitch also revised downward its GDP forecast for China from 7.2 percent to 5.6 percent this year — well below the Chinese government’s goal of 8 percent — and to 8.2 percent next year.
The Russian economy is expected to be the worst performer, with a 3 percent contraction this year, down from a previous estimate of 4 percent growth.
This could result in weaker-than-expected domestic demand in China, which would have a negative impact on Taiwan’s export-dependent economy, said Jonathan Lee (李信佳), senior director of the financial institutions group at Fitch Ratings Ltd Taiwan, which early last month forecast a 5.7 percent contraction for the local economy this year.
Lee said the agency had no plan to immediately revise downward its GDP forecast for Taiwan, as its latest forecast of 5.7 percent contraction — a downward adjustment from its forecast of a 2.1 percent contraction in late January — already took the nation’s export slump in the fourth quarter last year into consideration.
Only if the country’s exports performance in the first quarter of this year continued to deteriorate would the ratings agency make another downward revision to the local GDP forecast, which is expected sometime next month, Lee said.
The local economy is likely to bottom out in the fourth quarter of this year and see mild 2.3 percent growth next year, he said.
Globally, world economies are expected to contract by 2.7 percent this year, down from a previous estimate of 0.9 percent growth, before recovering to see 1.4 percent growth next year, Fitch said in its report.
The US, the UK, the EU and Japan are expected to see a contraction of 3.8 percent in aggregate GDP growth this year, down from a previous estimate of a 0.8 percent contraction, the report said.
In spite of the deepest global recession since World War II, Fitch said it “still expects a return to positive — albeit weak growth — in 2010 in response to unprecedented fiscal and monetary policy stimulus.”