Sat, May 17, 2003 - Page 1 News List

Forecasters expect SARS to dent GDP


The Directorate General of Budget, Accounting and Statistics (DGBAS) yesterday cut first quarter economic growth to 3.21 percent from 4.22 percent for the fourth quarter of last year.

The nation's top number crunchers predicted that second-quarter GDP growth would slide from 3.06 percent to 1.2 percent, dragging down GDP growth for this year to 2.89 percent amid the worsening SARS epidemic.

Slowing economic growth was caused by a drop in commercial activities and consumption in the second quarter, according to a DGBAS report released yesterday.

The official forecast appears optimistic when compared to those of research groups.

"In late April we predicted that economic growth for the year would be between 1.74 percent and 1.44 percent if SARS fails to be contained by the end of the year," Yu Min-chun (尤敏君), a researcher at the Taiwan Institute of Economic Research, said yesterday.

Another research organization, the Chung-Hua Institution for Economic Research, predicted on April 17 that if SARS is not under control by year end, GDP growth for this year will be dragged down to 2.71 percent.

The government expects the slide in GDP growth to be slowed by various SARS-relief measures and the passage of the NT$50 billion public construction program, the DGBAS report said.

But Yu said the package would not be enough.

"While the aid package may temporarily help industries hard hit by SARS, those measures won't be enough to support them if SARS drags on," Yu said.

GDP may not be the only SARS casualty.

Rising numbers of jobless may soon follow, with unemployment rising by 1.2 percentage points, Yu said.

Cheng Cheng-mount (鄭貞茂), vice president of Citibank Taiwan, also warned of a surge in unemployment in the near future if SARS is not brought under control.

"The unemployment rate has not climbed significantly because many staff prefer going without a salary to losing their jobs," Cheng said. "But the rate will climb when companies cannot survive and declare bankruptcy."

Meanwhile, the government's export growth forecast for this year was cut to 7.0 percent from 7.4 percent. Last year, exports rose 6.3 percent after falling 17.2 percent in 2001.

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