Taiwan’s economy is currently in a U-shaped turnaround and is likely to slowly recover this year, National Development Council (NDC) Deputy Minister Kao Shien-quey (高仙桂) said yesterday, rejecting a Bloomberg News forecast that the nation is headed toward a recession.
“This year should not be so bad,” Kao said, responding to the Bloomberg report on Monday that said Taiwan has a 55 percent chance of falling into recession, compared with 30 percent for Japan and South Korea’s 18 percent.
She said recent leading indicators and purchasing manager’s indexes have shown that the economy is likely to bottom out in the first and second quarters of this year and begin to recover in the second half of the year.
Taiwan’s recovery would be gradual, she said, adding that she was not sure what criteria Bloomberg used to make its prediction since the company presented the results of surveys by its economists, but did not give any in-depth analysis.
Kao, an economist, said the three main factors impacting the nation’s economy are the pace of recovery of the US and European economies, China’s economic performance and the development of Taiwan’s information communication technology industry.
China’s performance is the most important factor and needs to be closely monitored, Kao said, adding that a further downturn in China could profoundly affect other Asian economies, including Singapore and South Korea.
However, Beijing has several policies that can be used, including interest rate cuts and an expansionary fiscal policy, Kao said.
Based on a series of surveys conducted between October and December last year, Bloomberg compiled a report on the outlook for 93 economies, with Taiwan in a category called the “Recession Club.”
“Among the nations with a 50-50 chance of two quarters of contraction is Taiwan,” the report said. “Its annual growth rate slowed dramatically from 4 percent in the first quarter of 2015 to minus 0.6 percent in the second quarter due to a slowdown in exports to China.”
Bloomberg predicted Taiwan’s full year GDP growth this year to be 2 percent, with a 55 percent chance of recession.
It forecast a 2.9 percent growth rate for South Korea, 2.3 percent for Singapore and 1 percent for Japan.
Taiwan’s economy is likely to show 0.49 percent growth for the fourth quarter of last year and 1.06 percent annual growth for the whole of last year, the Directorate-General of Budget, Accounting and Statistics said.
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