Citibank has lowered its forecast for Taiwan’s GDP growth for this year to 1.9 percent from a previous estimate of 2.4 percent.
Cheng Cheng-mount (鄭貞茂), chief economist at Citibank Taiwan, said on Friday that the downgrade reflects the fall in Taiwanese exports — the driving force behind the country’s economic growth.
Cheng said the downward revision was made soon after Taiwan reported last week a year-on-year contraction in last month’s exports.
Last month, Taiwan’s exports fell 11.6 percent from the same month last year to US$24.8 billion, marking the fifth consecutive month that a year-on-year drop was recorded.
The Citibank economist said the 11.6 percent fall was much steeper than the average monthly fall for the second quarter, prompting the bank to cut its forecast.
According to the Directorate- General of Budget, Accounting and Statistics (DGBAS), Taiwan’s exports for the second quarter fell from 5.41 percent in US dollar terms, compared with a 4 percent fall recorded in the first quarter.
However, the Citibank forecast is still higher than the government’s estimate of a 1.66 percent increase.
The same day, the DGBAS downgraded its GDP forecast for this year from its previous estimate of 2.08 percent, citing weakening global demand as a concern.
The DGBAS said the economy in the second quarter shrank by 0.18 percent from a year earlier after an increase of 0.40 percent was recorded in the first quarter. In the first half of this year, the agency said, GDP grew 0.10 percent year-on-year.
Citibank also lowered its Taiwanese GDP growth forecast last week for next year to 3.6 percent from an earlier estimate of 4.2 percent.
Other foreign banks in Taiwan are expected to soon follow suit by cutting their GDP growth predictions for this year.
‧ Citibank has slashed its Taiwan GDP growth forecast to 1.9 percent.
‧ ANZ, Standard Chartered and DBS have also reduced their forecasts.
The latest figures from the banking groups DBS Bank of Singapore, Australia and New Zealand Banking Group and Standard Chartered Bank stood at 2 percent, 3.1 percent and 2.7 percent respectively.