The Directorate-General of Budget, Accounting and Statistics (DGBAS) is expected to cut its GDP forecast for this year from the 4.81 percent growth rate it estimated in August in its preliminary release today amid lower-than-expected private investment and declining exports in the second half of the year, economists said.
On Friday, Citigroup Global Markets Inc lowered its forecast for Taiwan’s economic expansion this year to 4.5 percent annually from 4.8 percent, reflecting more evidence of economic slowdown.
“We expect third-quarter GDP to decline by 0.6 percent from the previous quarter, marking the first sequential decline after nine quarters of positive growth, with exports leading the decline, followed by decreasing private investment,” Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei, said in a research report.
The foreign brokerage house forecast that Taiwan’s GDP would expand by 3.6 percent for the third quarter, while slowing to 3.3 percent in the fourth quarter on continuing weak momentum, the report’s data showed.
The 3.3 percent expansion for the October-to-December period, which is lower than 4.71 percent economic growth estimated by the DGBAS in August, indicated the government may further cut its forecast for full-year GDP growth.
Citigroup also revised downward its forecast for Taiwan’s GDP growth for next year to 4 percent from 4.6 percent to reflect more evidence of an economic slowdown, but expected Taiwan’s economy to bottom out in the first quarter next year and then gradually pick up.
In addition, Goldman Sachs last month revised downward its forecast for the nation’s GDP growth for this year from 4.7 percent to 4.4 percent, while cutting its growth forecast from 4.6 percent to 3.2 percent for next year, on the back of its global GDP downgrades.
“The below-consensus results were mainly due to Taiwan’s high sensitivity to the global economic cycle, and limited policy -maneuverability, monetarily and fiscally, in case of a sharp global downturn,” the brokerage house said in a research report.
The same tone was also reflected in Taiwan’s leading indicators, with the index’s annualized six-month rate of change, which provides a more accurate forecast of the business cycle in the near future, slipping 0.9 percent to minus 0.7 points last month.
This was not the first time that the rate has turned negative since April 2009, but led Council for Economic Planning and Development Vice Chairman Hu Chung-ying (胡仲英) to confirm that the economy would continue to slow for the next six months.
The recent downward revisions for Taiwan’s GDP growth this year by the two brokerage houses and other institutes, such as the Economist Intelligence Unit, Global Insight and the Chung-hua Institution for Economic Research (中華經濟研究院), gave further weight to expectations that the government would cut its forecast for economic expansion this year.
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