The government-funded Industrial Economics and Knowledge Center (IEK) yesterday trimmed its production value forecast for the local manufacturing sector this year by 0.22 percentage points, saying demand would be affected by a weakening Chinese economy and falling crude oil prices.
The manufacturing sector’s weakness could lead to a downward revision of the nation’s economic growth this year, Taiwan Academy of Banking and Finance (台灣金融研訓院) president Cheng Cheng-mount (鄭貞茂) told a media briefing arranged by the IEK.
“The government’s forecast of 3.78 percent annual growth for Taiwan’s GDP [this year] is a bit too optimistic, given disappointing exports in the first quarter and newly released export order figures,” Cheng said.
Most research houses expect Taiwan to grow at an annual pace of between 3.5 percent and 3.6 percent this year, he said.
The IEK now expects local manufacturing output to grow 2.71 percent annually this year to NT$19.51 trillion (US$625.86 billion), rather than the 2.93 percent increase to NT$19.55 trillion it estimated in January.
“Petrochemicals are dragging down the whole manufacturing sector’s production value,” IEK research manager Cheng Chih-chiang (陳自強) said.
“Exports [of petrochemical products] fell at a deeper pace [last quarter] than we expected, offsetting benefits from weak crude oil prices,” he said.
The IEK previously forecast that every 10 percent decline in global crude oil prices would boost the production value of the local manufacturing sector by 0.25 percent. Global crude oil prices have recently fallen to about US$60 per barrel from US$70 last quarter, he said.
The IEK has cut its annual growth forecast for the petrochemical industry’s production value by 1.1 percentage points to 0.8 percent this year, compared with its earlier estimate of 1.9 percent growth, Cheng Chih-chiang said.
The center raised its output forecasts for the information and electronics industry and the electrical and machinery industry slightly to 5.09 percent and 2.22 percent respectively for this year.
The machine tool industry is expected to grow by 1.3 percent to NT$152.9 billion this year from last year’s NT$150.9 billion, supported by growing demand from China and Europe, the IEK said.
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