Taiwan’s lower-than-expected economic expansion in the third quarter has prompted Barclays Capital to cut its forecast for the nation’s GDP growth this year to 1.1 percent, from the 1.7 percent it estimated in August.
Preliminary figures released by the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Wednesday showed that GDP growth expanded by 1.02 percent in the third quarter from a year earlier, below the market consensus of about 1.5 percent.
The agency also revised down its full-year growth forecast to 1.05 percent, from the 1.66 percent it made last month, and its forecast for next year to 3.09 percent, from its prior estimate of 3.67 percent.
Barclays also cut its GDP forecast for next year to 3 percent from the 3.4 percent it estimated in August.
“In the third quarter, the drag on growth came from consumption,” Leong Wai Ho (梁偉豪), a Singapore-based economist at Barclays Capital, said in a report.
The slower pace of job creation and the stock market’s sluggish performance, combined with various global uncertainties, took a toll on consumers during the July-to-September period, Leong said.
In contrast, businesses now feel more confident about investing in Taiwan, while exports have also picked up, Leong added.
Despite slower growth projections, Barclays said the central bank is likely to keep its policy rate unchanged at 1.875 percent at its meeting next month.
Moody’s Analytics is also reviewing its growth forecast, with Sydney-based associate economist Katrina Ell saying the firm was likely to trim it to close to 1 percent, from its current forecast of 1.8 percent.
Credit Suisse said the latest official forecast is largely in line with its 1 percent growth estimate for this year and 3.4 percent for next year.
Credit Suisse research analyst Christiaan Tuntono said in a note that he expected the government to implement more measures in response to the “structural slowdown of Taiwan’s export-led economy.”
Other than continuing to run a fiscal deficit next year, the pressure for a rate cut remains, though the likelihood for a near-term action could be restrained by a rise in headline inflation, he said.