The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday cut its growth forecast for this year as global uncertainty heightens, posing a risk to the nation’s export-oriented economy.
The nation’s economy is forecast to expand 2.27 percent this year, down from the 2.41 percent the agency predicted in November last year, as sales of smartphones and other electronics products disappoint.
Taiwan is home to the world’s largest suppliers of chips, camera lenses, casings, battery packs, touchpanels and other critical components used in smartphones, laptops, TVs and other technology products.
“The economy is losing steam, but not in a recessionary state,” DGBAS Minister Chu Tzer-ming (朱澤民) told a news conference.
The ongoing tariff dispute between the US and China poses the biggest downside risk, while monetary normalization moves by global central banks and financial market volatility might also weigh on growth, Chu said.
Exports are expected to edge up 0.19 percent this year after contracting in the first half and rebounding in the fall when global technology brands launch new-generation devices, the DGBAS said in a report.
Imports are forecast to decline 0.95 percent this year, dragged by soft oil and raw material prices, as well as tepid demand for capital equipment, it said.
“Poor [order] visibility has led companies to turn cautious about capacity upgrade or expansion,” the minister said.
Compared with the trade dispute, a faster slowdown in China’s economy might hurt Taiwan more, as exports destined for China are mostly intended for the domestic market, Chu said.
That explains why the government aims to step up capital formation by 11.96 percent, while public enterprises seek to increase 8.63 percent, the minister said, adding that the room for the government to boost GDP growth is limited.
The government has also introduced subsidies for domestic trips and purchases of energy-saving home appliances in the hope of stimulating private consumption, Chu said.
The nation’s rapidly aging society may subdue the strength of the stimulus measures, DGBAS said.
The statistic agency also revised down its GDP growth estimate for last year from 2.66 percent to 2.6 percent.
While it revised up its fourth-quarter growth to 1.78 percent, from the 1.76 percent it predicted last month, it was the slowest pace of expansion since the second quarter of 2016.
Chu dismissed concerns about a recession, saying that the nation’s economy would prove resilient because Taiwanese semiconductor firms remain competitive worldwide, making them less vulnerable to the tariff dispute.
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