Domestic and foreign financial institutions have revised down their growth forecast for Taiwan this year to a range of between 1.1 percent and 2.6 percent, prompted by shockingly poor economic data last quarter.
JPMorgan Chase & Co lowered its growth projection for Taiwan from 2.5 percent to 1.1 percent after official data showed that the economy grew a mere 0.64 percent during the April-to-June period.
WEAK EXPORTS
“Our forecast for full-year GDP growth now stands at 1.1 percent, assuming a sequential recovery of 3 percent in the third and fourth quarters,” JPMorgan said in a note this week.
Export weakness, especially for tech products, accounted for the sub-par performance, the US bank said.
Taiwan is home to the world’s largest contract chipmakers, chip testers and critical component suppliers.
Singaporean banking group DBS Group Holdings Ltd also cut its growth forecast for Taiwan from 2.7 percent to 1.8 percent, the lowest in six years.
China’s economic slowdown, global trade weakness and inventory destocking in the electronics sector have seriously hurt Taiwan’s exports, DBS said in a report.
SENTIMENT
“If growth data fails to show confirmative signs of a recovery in the next couple of months, a rate cut could be delivered at the next central bank meeting in September,” DBS said, adding that the ongoing string of forecast downgrades could depress investor sentiment in the short term.
Jih Sun Securities Investment Consulting Co (日盛投顧), which forecast GDP growth at 2.6 percent this year, said the economy would fare stronger in the second half than the first half, as the upcoming launch of Apple Inc’s new iPhone products could benefit its Taiwanese supply chain.
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