The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday revised downward its forecast for GDP growth this year to 3.03 percent from the 3.38 percent it estimated last month, mainly due to weaker exports.
It was the sixth straight time DGBAS has revised downward its forecast for this year’s GDP growth since August last year, when the agency forecast a 4.58 percent growth rate for this year.
“Exports fell more than expected in the first half of the year, which is the major factor making us revise downward our full-year economic growth forecast,” DGBAS section chief Joshua Gau (高志祥) told a press conference.
Exports dropped 4 percent in the first quarter from a year earlier, a phenomenon rarely seen, Gau said.
Previous drops in quarterly exports only happened during the Asian financial crisis that began in 1997, the dot-com bubble in 2000 and the global financial crisis that began in 2008.
Full-year exports are expected to grow 2.69 percent to US$316.5 billion this year, with exports in the second quarter continuing to post a 2.55 percent year-on-year decline, DGBAS statistics showed.
The agency also revised downward its forecast for private consumption this year to 2.03 percent from the 2.28 percent estimated last month, citing the negative impact of the recent volatile stock market and rising inflationary pressure.
First-quarter economic growth stood at 0.39 percent, the lowest level in more than two years and a deceleration from the 1.85 percent in the fourth quarter of last year, DGBAS said.
Katrina Ell, a Sydney-based economist at Moody’s Analytics, said electronics are the key weak point, dragging down manufacturing and exports, and flowing through to private consumption.
“Production and exports face severe headwinds due to weak global technology demand,” Ell said in a research note yesterday.
She expects weakness to continue into the second quarter, because global technology demand has remained soft, before the economy strengthens in the second half of the year.
The latest DGBAS data also showed GDP growth is expected to expand gradually to 0.77 percent in the second quarter, 4 percent in the third quarter and 6.55 percent in the fourth quarter.
The government’s decision to increase electricity rates in three stages, instead of the original one-time bump, has helped lessen the negative impact on GDP growth this year, DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) said.
The rise in electricity and gas prices under the new plan is expected to drag down economic growth this year by 0.24 percentage points, down from the original plan’s 0.34 percentage point impact, Tsai said.
The new plan is also expected to have less impact on annual growth in the consumer price index (CPI), allowing the DGBAS to revise downward its CPI growth forecast to 1.84 percent for this year, compared with its previous estimate of 1.94 percent.