The economy is expected to grow 3.85 percent this year, slower than last month’s estimate of 3.91 percent, amid weaker-than-expected private investment, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
However, annual GDP growth may climb quarter-by-quarter this year as the economic cycle likely already hit bottom during the fourth quarter of last year, the DGBAS said.
“We have cut our forecast for GDP growth because the private investment sector is expected to show a lower-than-expected performance,” DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) told a press conference.
The agency revised downward its forecast on private investment to a 1.16 percent decline from the 2.57 percent growth estimated in November last year, reflecting domestic companies’ conservative attitude toward capital expenditure this year.
“We found that local companies, especially those in the semiconductor, LCD panel and DRAM industries, plan to contract their capital expenditure this year,” DGBAS section chief Joshua Gau (高志祥) said, citing information from the latest investors’ conferences held by domestic technology firms.
Meanwhile, the agency cut its forecast on export growth this year to 4.87 percent, from the 5.27 percent estimated in November, and lowered its forecast on private consumption growth this year to 2.72 percent from 2.88 percent.
However, the agency expects the economy to continue to rebound every quarter this year — from 1.19 percent growth in the first quarter to a 5.97 percent expansion in the fourth quarter — unlike last year’s trend, when annual GDP growth slowed quarter-by-quarter.
Leong Wai Ho (梁偉豪), a Singapore-based economist at Barclays Capital, said the government’s growth outlook was brighter as factors such as a pickup in the US’ growth momentum, receding recession risks in the eurozone and the reduced chance of a hard landing in China would support growth in Taiwan.
Sydney-based Katrina Ell, an associate economist at Moody’s Analytics, said the government did not have much space to increase spending for now, so monetary policy would be the main tool to support demand amid a weak global economy.
As a result, Ell said she expected the central bank to keep policy rates at 1.875 percent at its board meeting next month, but cut rates by 12.5 basis points at its meeting in June, unless demand shows strong signs of picking up.
As for last year, the economy grew 4.04 percent, with fourth-quarter growth standing at 1.89 percent, the lowest level since the third quarter of 2009, DGBAS statistics showed.