The latest export order data show Taiwan’s external trade has stabilized, but that was not enough to prevent Credit Suisse AG from lowering its economic growth forecast for Taiwan this year.
In a report issued on Thursday, Switzerland’s second-biggest bank said it had cut Taiwan’s GDP growth forecast to 2.3 percent this year from a previous forecast of 2.7 percent made in April.
The new forecast came on the same day that the Ministry of Economic Affairs reported Taiwan’s export orders fell 0.4 percent year-on-year to US$36.33 billion last month.
Last month’s 0.4 percent decline narrowed from the 1.1 percent fall posted in April and it was better than the market’s expectation of a 1.2 percent decline.
Orders in the first five months of the year contracted 1.3 percent from the same period of last year, which was less than the 1.6 percent decline seen in the first four months, the ministry’s data showed.
“While the yearly contraction in Taiwan’s export orders has narrowed, the performance has remained sluggish overall, not supporting our previous view of a more rapid bounce back,” Hong Kong-based Credit Suisse economist Christiaan Tuntono said in a note.
Credit Suisse still expects Taiwan’s exports and industrial production growth to show only “a milder improvement” in the second quarter and in the second half of the year respectively.
“China’s growth momentum remained weak, dragging over the growth momentum in Taiwan,” Tuntono wrote in the note.
Credit Suisse's revised GDP growth forecast of 2.3 percent for Taiwan this year is lower than Barclays Capital's 3 percent, as well as Citibank NA's 2.9 percent and JPMorgan Chase & Co's 2.5 percent.
Taiwan is not the only country in Asia for which Credit Suisse has revised downward its economic growth forecast in its latest Global Economics Quarterly report.
The report said China’s economic growth is expected to reach 7.4 percent this year, down from its previous forecast of 8 percent, and 7.6 percent for next year, also lowered from the 8.2 percent forecast previously.
As a result, the bank cut South Korea’s GDP growth forecast for this year to 2.5 percent from 2.7 percent, lowered Hong Kong’s growth to 3 percent from 3.2 percent and slashed Thailand’s figure to 4.7 percent from 5.2 percent.