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DGBAS lowers its GDP predictions

The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday lowered its GDP growth forecast for this year from 4.78 percent to 4.3 percent on weakening consumer spending at home and falling demand from abroad.

Lower-than-expected numbers of Chinese tourists also contributed to the revision, the agency said.

“Surging fuel and raw material costs have eroded the profits of industries and prompted consumers to shun spending,” DGBAS Director-General Shih Su-mei (石素梅) told a media briefing. “GDP growth is expected to reach 4.3 percent this year, down from 4.78 percent as estimated in May.”

Shih put the rate at 4.32 percent for the second quarter, down from 6.25 percent in the first quarter. She estimated the figure would be 3.04 percent and 3.75 percent for the third and fourth quarters respectively.

Annual per capita income is projected at US$18,883, down from the US$19,143 forecast three months ago, DGBAS said.

Exports, which posted 18.08 percent growth in the first half, are expected to slow to 6.29 percent in the second half and average 11.73 percent for the entire year, up 5.05 percent from a year earlier, the report said.

The economy’s performance is comforting given the impact of the US subprime mortgage crisis on the global economy, Shih said.

Imports were expected to accelerate at a quicker pace of 15.98 percent this year, up 1.01 percent compared with last year, leaving an annual trade surplus of US$21.3 billion, the report said.

Statistics Bureau Director Tsai Hung-kun (蔡鴻坤) said officials had been too upbeat about the impact of Chinese tourism on the GDP.

“Only 280 Chinese tourists visited Taiwan per day in the last two months, lower than the 3,000 estimated in May,” Tsai said.

“The figure is expected to jump to 1,500 between September and December and they may spend NT$10.4 billion [US$333 million] here, adding 0.1 percent to the GDP index,” Tsai said.

The agency had expected Chinese tourists would contribute NT$25.7 billion to the economy and raise GDP by 0.2 percent.

Meanwhile, the DGBAS hiked its projection of inflation to 3.74 percent for this year, from the 3.29 percent forecast last quarter.

Tsai said inflationary pressures would ease next year, with crude oil prices hovering around US$116.6 a barrel.

The DGBAS said GDP growth should hit 5.08 percent next year, with Chinese tourists expected to contribute 0.4 or 0.45 percentage points, or NT$65.9 billion.
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