British banking group Barclays PLC yesterday hacked its forecast for GDP growth in Taiwan by 1.7 percentage points to 2 percent for this year, after poor exports dragged down the nation’s showing in the second quarter and might continue to weigh it down.
“Exports cut more deeply into growth last quarter, meriting a significant downward revision,” Barclays senior regional economist Leong Wai Ho (梁偉豪) said in a research note.
Taiwan turned out not to be immune to a slowdown in industrialized Asia, as evidenced by poor exports that subtracted 0.9 percentage points from growth last quarter, the economist said.
The government’s advance reading for GDP growth printed 0.64 percent during the April-to-June period, the Directorate-General of Budget, Accounting and Statistics said last week and is due to update its growth projection later this month.
The figure is markedly weaker than the forecast by Barclays of 3 percent and the market consensus of 2.6 percent, Wai said.
Wai attributed the disappointing data mainly to a more gradual recovery in the US and outages at petrochemical exporters.
Compounding the headwinds was the persistent inventory overhang in electronics, which is now prompting technology companies to temper their expectations for a more modest pickup in the second half, the economist said.
Barclays stood by its expectation of a moderate acceleration in business activity in coming quarters, aided by new electronics product launches and generally steadier support from the US and Europe.
Against the current backdrop, the central bank would keep its loose monetary policy for a while longer in order to support economic growth, Wai said.
“As such, we push back our rate normalization forecast by two quarters and now expect the first rate hike of 12.5 basis points in June next year,” he said, adding the bank could raise the level of excess liquidity in the coming months.
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