DBS Bank downgrades forecast for GDP growth

CAUSES FOR CONCERN::The bank said that global demand for exports had weakened amid the crisis in the eurozone, as well as sluggish growth in the US

Staff writer, with CNA

Wed, May 08, 2013 - Page 14

DBS Bank said yesterday that it has downgraded its forecast for the nation’s GDP growth for this year to 3.3 percent from 4.2 percent after the country reported lower-than-expected economic growth for the first quarter of this year.

However, the bank has maintained its forecast for Taiwan’s GDP growth at 4 percent next year.

A week earlier, the government reported that the country’s GDP growth for the January-to-March period grew 1.54 percent from a year earlier, much lower than an earlier estimate of 3.26 percent.

DBS said the weaker-than-expected GDP data reflected disappointing exports during the three-month period, which slowed the pace of economic recovery.

According to government data, real exports of merchandise and services after inflation adjustments grew only 4.84 percent in the first quarter, compared with a previous forecast of a 6.2 percent increase.

As the pace of China’s economic growth has also been slower than expected, US economic growth remains fragile and the eurozone is still in recession, global demand has weakened, affecting Taiwan’s exports, the bank said.

Judging from the decline in export orders in March, the bank said exports are expected to remain under pressure in the second quarter, so that a significant rebound would not be seen until the second half of this year.

DBS said it has maintained its view that the central bank is expected to leave key interest rates unchanged over the next six months to keep liquidity ample.