More financial institutes have trimmed their forecasts for Taiwan’s GDP growth on the back of intensifying downside risks resulting from disappointing exports data.
Cathay Financial Holding Co (國泰金控), the nation’s largest financial service provider by assets, said the nation’s economic forecast over the next three months had turned from “fair” to “cloudy” after growth momentum at home and abroad showed signs of stagnation.
China’s pace of recovery is slower than expected and the US economy is going through a moderate temporary slowdown. Taiwan’s GDP will shed 0.75 percentage points for every percentage point that the two economies lose, Cathay Financial said in a report.
That the EU remains mired in recession also complicates Taiwan’s recovery, although it depends less on the region than on the US or China, Cathay Financial said.
“Later this month, the statistics bureau is likely to revise down GDP growth to 3 percent,” from 3.59 percent for this year, the bank said.
JPMorgan Chase Bank and Daiwa Securities Inc are less optimistic, and have cut their GDP forecasts this year to 2.7 percent and 2.3 percent respectively.
“On the growth front, the latest [export] data suggests the global industrial sector is shifting down in the near term, in response to weak final demand growth,” JPMorgan said in a report, after official data showed on Monday that the nation’s exports contracted by 1.9 percent year-on-year last month while imports fell by 8.2 percent.
JPMorgan previously predicted the economy would expand 4.2 percent this year, but cut its forecast to 3.3 percent on April 24 and to 2.7 percent on Monday to reflect a slew of disappointing economic data released over the past two weeks.
The nation’s softening trade data for last month also affirm Daiwa’s view that the Asian region has yet to rebound from sluggish global demand.
“We now predict Taiwan’s exports to grow by 3 percent this year,” from an earlier estimate of 6 percent, while imports growth may slow to 5 percent from 6.5 percent, Daiwa said in a report yesterday.
Daiwa also cut its GDP growth target for Taiwan to 2.3 percent this year from 3 percent, adding it still sees risks tilting to the downside.
However, JPMorgan said it expected global economy to improve further after mid-year, which would provide support for Taiwanese exports and industrial sectors.