The Industrial Technology Research Institute (ITRI) yesterday lowered its growth forecast for the manufacturing sector’s production value to 1.58 percent for this year, citing downside risks in exports amid a slowdown in the global economy.
In its IEK Current Quarterly Model report, the institute cut its growth forecast for the manufacturing sector’s output by 1.63 percentage points from its estimate in October last year.
The sector’s production value would be NT$19.56 trillion (US$633.09 billion), down from its earlier forecast of NT$20.07 trillion, the ITRI said.
Trade tensions between the US and China have adversely affected the global economy and reduced demand, the institute’s research team said in the report.
The squeeze is being felt in Taiwan’s export-oriented economy, where many manufacturers depend heavily on outbound sales, the report said.
The Ministry of Economic Affairs on Monday forecast an 11.8 to 14.1 percent drop in export orders this month from a year ago, after exports last month dropped 10.5 percent annually.
Last week, Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker, projected a 1 to 3 percent annual growth in sales this year, down from its earlier forecast of 5 to 10 percent.
A global economic slowdown has led to a decline in raw material prices, which would adversely affect growth in the local manufacturing sector, the ITRI said.
The IMF on Monday lowered its growth forecast for the global economy to 3.5 percent this year and 3.6 percent next year, down 0.2 and 0.1 percentage points respectively from its estimate in October last year.
Given such unfavorable external factors, production value growth is likely to shrink in the manufacturing sector unless the circumstances change, the ITRI said.
Confidence in the global economy might recover if Washington and Beijing reach an agreement, but in the meantime, the investment plans of many enterprises in the Asia-Pacific region have been disrupted, the institute said.
It forecast a 1.15 percent annual increase in the production value of the metal and electrical industry to NT$5.51 trillion this year, and a 2.2 percent growth in the output of the information and electronics industry to NT$6.67 trillion.
The production value of the chemical industry is expected to hit NT$5.02 trillion, up 1.1 percent from a year earlier, the ITRI said.
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