Wed, Apr 24, 2019 - Page 11 News List

Bank cuts GDP growth forecast

RETURNING FIRMS:Standard Chartered said that private investment is expected to expand at a double-digit percentage this year and would be a strong growth engine

By Kao Shih-ching  /  Staff reporter

Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) yesterday trimmed its forecast for this year’s GDP growth from 2.5 percent to 2.1 percent as exports continue to fall.

The British banking group expects strong growth in private investment to help the economy rebound in the second half.

“We had to cut the growth forecast as exports declined 4.2 percent in the first quarter, worse than our expectation,” Standard Chartered Bank Taiwan Northeast Asia senior economist Tony Phoo (符銘財) told a media briefing in Taipei.

GDP growth could slow to 1.5 percent in the first half of the year, but would climb to 2.5 percent in the second half, Phoo said.

Imports of capital equipment rose 15.4 percent in the first quarter, up from the flat growth in the fourth quarter last year, as firms moved back to Taiwan from overseas, Phoo said.

Imports of semiconductor equipment, a gauge for the semiconductor industry’s outlook, jumped 41 percent, reversing an annual decline of 3.3 percent in the same period last year, Phoo said.

“While some companies imported new equipment, others could have shipped existing machinery from China,” he said. “The US-China trade dispute might not be the sole reason why Taiwanese companies are returning home, but it acted as a catalyst for those that were hesitating about moving out of China.”

Private investment is expected to expand at a double-digit percentage this year and would be a strong growth engine, Phoo said, adding that it would also help boost the employment rate.

Exports are expected to recover in the second half, partly helped by the returning firms, he said.

Although exports orders declined steeply last month, real exports would fare better, as firms moving back to Taiwan would be more competitive than their Chinese peers after factoring in US tariffs, he added.

The central bank is likely to keep its benchmark interest rate on hold, while its Southeast Asian counterparts begin to cut rates to support their economies, Phoo said.

The bank cut its forecast for inflation from 1.3 percent to 1 percent after the government did not raise electricity charges last month, he said.

However, the bank’s forecast is still higher than the government’s forecast of 0.73 percent, as it predicted that crude oil prices would hover between US$74 and US$78 per barrel this year, while the prices of eggs and pork would likely rise.

Core inflation, which excludes food and energy prices, is expected to remain stable, the bank said.

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