Council for Economic Planning and Development (CEPD) Minister Christina Liu (劉憶如) yesterday said that the disaster in Japan would lower Taiwan’s GDP growth by no more than 0.2 percentage points this year.
The council’s latest estimate, however, only factored in the short-term impact on Taiwan in terms of the value of exports and imports, which means the council might revise its forecast if there is a lingering impact on the economy.
“The CEPD’s report showed that the Japanese quake could reduce the nation’s [Taiwan’s] GDP growth by between 0.11 and 0.2 percentage points,” Liu told a media briefing.
In December, the council said that Taiwan’s GDP would rise by 4.8 percent this year. Last month, the Directorate-General of Budget, Accounting and Statistics adjusted its economic growth forecast for this year downward from 5.03 percent to 4.92 percent.
The chemicals, metals, electronics, semiconductors, hotels and restaurants industries would be the ones most affected, with their output value expected to drop by US$1.08 billion because of lower exports to Japan after the quake, the report showed.
As for imports from Japan, the quake would have a larger impact on the chemicals, metals, mechanical, electronics and transport industries, driving down their output by US$1.67 billion, the council said.
The agricultural, fishery and livestock industries will also be adversely affected by the quake, as Japan is one of their main export destinations, Liu said.
The report did not factor in mid to long-term variables such as possible orders transferred from Japan, additional orders following Japan’s reconstruction and a potential shortage of electronics components, Liu said.
Overall, however, Liu said GDP growth would not be affected by these variables, as the benefits would offset the impact of negative factors.
The quake would also increase inflationary pressure in Taiwan and emerging markets in Asia because of rising energy and food prices, Liu said.
“The radioactive crisis in Japan following the earthquake has drawn global attention to nuclear safety and boosted the prices of other energy sources like coal and petroleum,” Liu said.
Kevin Hsiao (蕭正義), director of UBS Wealth Management Research in Taiwan, agreed that the crisis in Japan would heighten inflationary pressure in Asia, as the Japanese government could introduce quantitative easing measures during its reconstruction period.
Hsiao also expected inflationary pressure in the region to peak either at the end of the second quarter or the beginning of the third quarter.
“Although growth in Taiwan’s consumer price index has been relatively steady compared with other Asian countries, the pace of growth could pick up in the second half of this year,” Hsiao told the media briefing.
UBS expects inflation in Taiwan to rise 1.9 percent for this year, while the DGBAS expects a 2 percent expansion, data showed.
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