Taiwan is facing another quarter of slow growth to end the year, economists said on Saturday, seeing little on the horizon that could provide a much needed boost to the country’s sluggish export-oriented economy.
They said that although the nation remains on the path of economic recovery, momentum is slowing, with exports, investment and private consumption all showing signs of weakness and limited growth.
The pessimism deepened after the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday that GDP for the July-September period grew only 1.58 percent, lower than an earlier estimate of 2.47 percent it made in August.
The DGBAS said the disappointing economic data largely reflected lower-than-expected exports during the three-month period. Outbound sales account for about 70 percent of GDP.
Gordon Sun (孫明德), director of the macroeconomic forecasting center of the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院), said the third-quarter GDP growth was “much worse than expected” as global demand remained overshadowed by uncertainty.
Sun said demand from the US, which was the second largest buyer of Taiwan-made goods in the first nine months of this year, may have been hurt by the US government shutdown and debt ceiling crisis and he was downbeat on the prospects for exports in the coming months.
TIER, one of the nation’s leading economic think tanks, is scheduled to update its forecast of this year’s GDP growth on Nov. 5. Most people believe the think tank will cut its previous estimate of 2.52 percent to 2 percent or even lower.
Wu Chung-shu (吳中書), president of the Chung-Hua Institution for Economic Research (中華經濟研究院), said the nation is expected to face a major challenge in achieving 2 percent economic growth for this year.
In addition to the debt problems in Washington, sales during the Oct. 1 National Day holiday in China were lower than expected, and domestic food safety concerns will also likely hurt economic performance, Wu said.
The Yuanta-Polaris Research Institute (元大寶華綜合經濟研究院) said that although the US Congress passed legislation in the middle of last month to reopen the government and raise the debt ceiling until January and February respectively, fiscal problems still exist and could affect the economy.
Yuanta-Polaris said Taiwan’s economy will also feel the brunt of other external factors, such as the slow pace of the economic recovery in the eurozone and less robust growth in China because of its moves to restructure its economy.
The DGBAS is scheduled to update its forecast for this year’s GDP growth on Nov. 29. In August, it cut its projection for annual economic growth to 2.31 percent, from an earlier 2.40 percent.
The country’s economy grew 1.62 percent in the first quarter and 2.49 percent in the second quarter, according to the DGBAS.
In its analysis of the weak third-quarter growth, the statistics bureau said all main sources of economic activity rose at lower-than-expected rates.
Third-quarter merchandise and services exports in Taiwan dollar terms grew 1.68 percent from a year earlier, compared with an estimate of a 3.66 percent increase made in August, the DGBAS reported. Capital formation, which includes both public and private investment, rose 1.04 percent for the third quarter, well below an earlier estimate of 3.02 percent growth, and private consumption grew 1.56 percent, compared with a previous estimate of a 2.44 percent rise.