Economists said forecasts for Taiwan’s growth should be lowered because of bad economic news worldwide, while officials were keeping a close eye on market developments after Standard & Poor’s cut of the US credit rating spurred a plunge on the TAIEX on Friday.
Taiwan Research Institute (TRI, 台灣綜合研究院) president Wu Tsai-yi (吳再益) said it would be hard for Taiwan to maintain economic growth of more than 5 percent this year, given the fiscal and economic challenges in the US — one of export-oriented Taiwan’s major export markets.
The ongoing debt crisis in Europe — another major market for Taiwan — is also contributing to the nation’s grim economic outlook, Wu said.
“It will be hard for the global economy to maintain continued expansion in the face of slower growth in major economies, such as the US and Europe,” Wu said.
Plant shutdowns in the wake of a string of fires at Formosa Plastics Group’s (台塑集團) Mailiao (麥寮) complex in Yunlin County could also adversely affect Taiwan’s economic growth this year, he said.
Wu said he now expects Taiwan to grow by either 4.7 percent or 4.8 percent for this year, slightly lower than the 5.01 percent estimated by the Directorate-General of Budget, Accounting and Statistics (DGBAS) at the end of last month.
Wu said he expected the statistics bureau to adjust that forecast to below 5 percent on Thursday next week, when it publishes second-quarter growth results and a forecast for the entire year.
However, the economic picture was not all bad, Wu said, adding that he expected rising domestic consumption and investment to help prop up Taiwan’s overall growth for the year.
Hu Sheng-cheng (胡勝正), a research fellow at Academia Sinica and a former chairman of the Council for Economic Planning and Development, said the DGBAS was very likely to lower its growth forecast to below 5 percent for this year.
Hu said he believed that Taiwan’s export growth would suffer because of the sluggishness in the global economy, dragging down the country’s overall growth.
Meanwhile, Vice Premier Sean Chen (陳?) held an “internal meeting” of government agencies yesterday, the Chinese-language United Evening News said, without citing where it obtained the information.
Central bank Governor Perng Fai-nan (彭淮南) was monitoring developments in the international community, the paper said.
According to US Department of Treasury data, Taiwan is the sixth-biggest foreign holder of US debt with US$153.4 billion, while the US is also among the nation’s major trading partners.
Additional reporting by AFP