Standard & Poor’s (S&P) Ratings Services yesterday lowered its economic growth forecasts for most of Asia, including cutting Taiwan’s GDP growth forecast to 1.9 percent from a previous estimate of 2.4 percent.
The agency attributed its latest downward revisions to a slowdown in China, ongoing troubles in the eurozone and a weaker recovery in the US, according to a report released yesterday titled Asia-Pacific Feels the Pressure of Ongoing Global Economic Uncertainty.
“We have lowered our base case forecasts of 2012 real GDP growth by about half a percentage point for China to 7.5 percent; Japan to 2.0 percent; Korea (Republic of) to 2.5 percent; Singapore (Republic of) to 2.1 percent; and Taiwan to 1.9 percent,” S&P credit analyst Andrew Palmer said in a press release.
“Our lower forecast for China recognizes that the central government had elected not to inject an economic stimulus of a size and speed necessary for an 8 percent growth rate,” Palmer wrote in the release, citing policymakers’ worry about rising inflationary pressure.
The agency has also revised its forecast down by about 1 percentage point each for Hong Kong — to 1.8 percent — and for India — to 5.5 percent — as well as marking down its forecast for Australia from 3.2 percent to 3 percent.
Meanwhile, the forecasts for other Asian economies remained unchanged except for the Philippines, which S&P predicted would register a growth of 4.9 percent this year, up from its previous estimate of 4.3 percent.
S&P said its downward forecast on Taiwan reflects the fall in China-bound exports, because China slowdown has a “flow-on effect” to Asia’s export-oriented economies such as Taiwan, South Korea, Hong Kong, Singapore and Japan.
Earlier this month, Cathay Financial Holding Co’s (國泰金控) research team cut its GDP growth forecast for Taiwan this year to 1.47 percent, from the 2.45 percent it estimated in June and Citibank last month lowered its forecast to 1.9 percent from 2.4 percent.
Nevertheless, the forecasts by S&P, Cathay Financial and Citibank remain higher than the government’s downward revision of 1.66 percent growth made last month.
Grace Ng (吳向紅), a Hong Kong-based economist at JPMorgan Chase Bank, said in a report that Taiwan's latest export orders report showed some early signs of improvement in demand from China, but she maintained her full-year GDP growth forecast for Taiwan at 1.1 percent.
"Overall, external demand conditions remain challenging for Taiwan in the near term," Ng wrote. "In the coming months it will be interesting to see if China’s macro policy support feeds through to some gradual uplift in its trade activity with Taiwan."