The Economist Intelligence Unit (EIU) maintained its forecast for Taiwan’s economic growth in its latest global outlook report, saying the nation’s GDP would contract by between 6 percent and 7 percent this year.
The figure was far lower than the average expected decline of 1.9 percent that the EIU forecast for Asia and Australia excluding Japan.
It also compared with a contraction of 3.1 percent for the global economy this year, the EIU said in the report.
Royal Bank of Scotland on Friday said Taiwan’s GDP would contract 6.7 percent this year.
Citibank Taiwan Ltd last Wednesday said Taiwan’s economy was likely to drop 4.4 percent this year.
Hong Kong-based Credit Lyonnais Securities Asia was the most pessimistic, predicting a contraction of 9.3 percent.
EIU, a research unit of The Economist magazine, said Taiwan, along with its close rival South Korea, would be severely hit by weakening major OECD economies and the downturn in China.
Taiwan’s exports declined 31.4 percent year-on-year to US$16.17 billion last month, the Ministry of Finance reported last week.
In the first five months of this year, exports fell 35.1 percent to US$71.54 billion from a year earlier, ministry data showed.
Ministry officials said China’s stimulus program had helped boost demand for Taiwanese electronic and communication products.
Last month, shipments to China — including Hong Kong — rose 8.9 percent month-on-month to US$6.75 billion, government data showed.
But the EIU doubted the effectiveness of a China-oriented buffer, despite the fact that exports to China already accounted for about 40 percent of Taiwanese exports.
“Like many other of China’s trading partners, they are also unlikely to benefit much from the stimulus-induced recovery in China, as most of the measures focus on spending with only a small import content, such as construction,” the UK-based researcher said in the report.
The report said the US economy would shrink 2.9 percent this year, with GDP contractions of 4.5 percent in euro zone countries, 4 percent in the UK and 7 percent in Japan.
The overall weakness in global demand for Taiwanese goods is likely to offset the contributions made by a recent improvement in cross-strait relations, the EIU said.
“In the near term, this [weakening exports] will outweigh the positive impact on business sentiment from an improvement in relations with the Chinese mainland and the likelihood that a free-trade deal will be signed,” it said.
As it believed the worst was over given the latest economic data, the EIU said it expects the global economy to grow substantially for the remainder of the year, albeit on a temporary basis.
But it said the risks to the global economy remained exceptionally high.
“The most serious concern is that the various stimulus packages globally will not be sufficient to trigger self-sustaining recovery,” it said.
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