The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday cut its forecast for the nation’s GDP growth this year from 2.2 percent to 2.12 percent as exports fared weaker than expected amid an increasingly unfavorable backdrop.
“We’re surprised at the drastic pace of retreat in export orders for December, which suggests poor exports in the next few months,” TIER economist Gordon Sun (孫明德) told a media briefing in Taipei.
Export orders last month fell 10.5 percent from a year earlier to US$43.38 billion, the worst decline in 32 months, as slowing global economic growth and US-China trade tensions sap demand for technology products, the Ministry of Economic Affairs reported on Monday.
Customs-cleared exports contracted 3 percent last month and would stay in negative territory this month, the Ministry of Finance said earlier.
TIER now expects outbound shipments of goods and services combined to grow 2.7 percent year-on-year this year, down from the 3.55 percent it predicted in November last year.
Imports might also expand at a milder pace of 3.21 percent, it said.
The institute attributed the downward revisions to slowing economies of major trading nations, a decline in international oil and commodity prices, and saturation of the mobile device sector.
It remains to be seen if the US and China can iron out their trade disputes at the negotiating table, Sun said.
The backdrop has led companies to turn conservative about the outlook and refrain from expansion, he said.
There might be more downward revisions going forward, as recent economic data at home and abroad offer no reason for upside surprises, Sun said, citing disappointing purchasing managers’ indices worldwide and declining property prices in the US, Canada and Australia.
In light of the softness in external trade, the government can help shore up the domestic economy through the introduction of stimulus measures to encourage private consumption when external demand turns weak, TIER president Lin Chien-fu (林建甫) said.
The travel subsidy is helpful, but is to expire this month, Lin said.
Consumer spending might remain strong over the Lunar New Year holiday next month and slip into a languid state afterward, the institute said.
“Authorities should consider consumption subsidies issued through digital payment systems to help boost online payments and the economy,” Lin said.
The think tank expects the consumer price index to grow a mild 1.1 percent this year and the wholesale price index to rise 2 percent from last year.
The New Taiwan dollar this year might trade at an average of NT$30.74 against the US dollar, TIER said.
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