Although the government revised downward its forecast for GDP growth this year and next year, it also said the nation’s economy would bottom out in the first quarter of next year.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) cut its forecast on economic growth for this year and next year from last month’s estimate of 4.56 percent and 4.38 percent, to 4.51 percent and 4.19 percent respectively.
“We cut our forecast for GDP growth because IHS Global Insight’s downward revision of global economic expansion this month could influence Taiwan’s exports, further dragging down private investment and consumption,” Directorate-General of Budget, Accounting and Statistics Minister Shih Su-mei (石素梅) told a press conference.
IHS Global Insight, the US-based independent economic and financial services firm, cut its -forecast for global economic growth for this year by 0.1 percentage points to 3 percent, while revising down growth for next year by 0.7 percentage points to 2.9 percent, -DGBAS said in a report.
Weaker-than-expected economic growth in the fourth quarter led the government to cut its economic growth forecast for this year, the DGBAS said. It substantially revised down last month’s economic growth forecast for the fourth quarter from 4.71 percent to 3.69 percent.
The DGBAS latest update showed that GDP growth in the third quarter was 3.42 percent, slightly higher than its estimate of a 3.37 percent expansion.
However, the shutdown of part of the Formosa Plastics Group’s (台塑集團) petrochemical plants in Mailiao (麥寮) Township, Yunlin County, dragged down growth in the third quarter, DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) said.
Exports are expected to grow 13.26 percent this year, while imports and private consumption could expand 13.41 percent and 3.4 percent. In contrast private investments was set to fall 2.75 percent, DGBAS data showed.
As for next year, the expansion in exports, imports and private consumption could slow to 5.27 percent, 4.67 percent and 2.88 percent respectively, while private investment would rise 2.57 percent, data showed.
Despite the continuing global economic slowdown, the -DGBAS said Taiwan’s economy would likely bottom out in the first quarter of next year, when GDP growth is expected to slow to 2.67 percent, before rising to 3.64 percent, 4.99 percent and 5.31 percent in the succeeding quarters.
Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei, said the government was too optimistic about the outlook for the second half of next year.
He expressed skepticism as to whether private investment would rebound next year.
Even so, the latest GDP update provided more evidence that the central bank could maintain its policy rate unchanged for an extended period, Cheng said in a research report.
Nevertheless, if the government again revises down its GDP forecast in its next report in February, the central bank might start considering a rate cut, Cheng said.
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