The government yesterday cut its economic growth forecast for this year to 4.81 percent — from the 5.01 percent it estimated last month — amid rising uncertainty about the global economy.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) also revised down first-quarter GDP growth to 6.16 percent from 6.55 percent, estimated GDP grew 5.02 percent in the second quarter and predicted 4.58 percent growth for next year.
The latest update showed that GDP growth in the first half of the year was 5.58 percent, weaker than the previous estimate of 5.72 percent, DGBAS data showed.
The government’s latest forecast came on the same day that Morgan Stanley revised downward its forecast for GDP growth to 4.2 percent for this year, from the 5 percent it previously predicted, and 3.6 percent for next year, down from 4.3 percent.
“We decided to revise the GDP forecast for this year amid the weaker-than-expected global economy, which may drag down Taiwan’s exports, private investment and consumption in the second half,” Directorate-General of Budget, Accounting and Statistics Minister Shih Su-mei (石素梅) told a press conference in Taipei.
Shih said major economic indicators showed a worse-than-expected global economic expansion this year, with Global Insight, an independent economic and financial services firm, recently revising its forecast for global economic expansion from the 3.5 percent it estimated in May to 3.1 percent.
“The slowing global economy may lower exports amid weaker demand for products made by Taiwanese companies, further dragging down local firms’ investment and domestic consumption,” DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) said.
DGBAS also revised down its forecast for exports growth from 15.89 percent to 15.24 percent and cut its estimate for the growth of private consumption from 3.92 percent to 3.55 percent.
The government expects private investment to drop 0.52 percent from a year earlier, mainly on lower capital expenditure by local semiconductor firms in the second half, data showed.
However, the 4.81 percent growth forecast did not factor in the impact of a possible shutdown of Formosa Plastics Group’s (台塑集團) petrochemical plants in Mailiao (麥寮) Township, Yunlin County, Tsai said, adding that the factory shutdown would influence annual GDP growth by as much as 0.2 percentage points.
On the inflation front, the agency expects the consumer price index to rise 1.59 percent this year, 0.3 percentage points lower than the 1.89 percent growth forecast it made last month, given better-than-expected weather conditions so far which have helped stabilize vegetable and fruit prices.
The government’s latest growth forecasts for this year and next imply “a more cautious outlook going forward,” said Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei.
“The official forecast suggests GDP will hit a trough in the third quarter and rebound in the fourth quarter,” Cheng said.