The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday revised downward its forecast for GDP growth this year to 1.66 percent from the 2.08 percent it estimated last month, mainly due to weaker-than-expected momentum in exports.
It was the eighth straight time the DGBAS had revised downward its forecast for this year’s GDP growth since August last year, when the agency forecast a 4.58 percent growth rate for this year.
“Exports fell more than expected in the first seven months, which is the major factor making us revise downward our full-year economic growth forecast,” section chief Joshua Gau (高志祥) told a press conference.
Meanwhile, weaker global economic momentum — which is likely to drag down export momentum — was the other downside driver for economic growth this year, Gau said.
IHS Global Insight cut its forecast for global economic growth this year to 2.6 percent from the 2.7 percent growth it estimated last month, providing more evidence of a slowing global economy.
The DGBAS expects exports to contract 1.72 percent this year — the first contraction since the global financial crisis — from 0.07 percent growth it forecast in May.
As well as the slowing global economy, section chief Jasmine Mei (梅家瑗) said industrial transformation and import substitution strategies in China, Taiwan’s major export market, would also be a drag on the nation’s exports.
The slowing output sector may further drag down domestic demand, with private consumption expected to post 1.58 percent growth, but private investment forecast to fall 1.03 percent this year, DGBAS said in a report.
Weaker global economic sentiment saw GDP fall 0.18 percent in the second quarter from the previous year, the first quarterly contraction since the third quarter of 2009, the report said.
Private consumption during the period also slumped to its lowest level since the second quarter of 2009 by posting a year-on-year growth of just 0.76 percent, the report said.
However, the DGBAS expects the nation’s GDP to return to growth in the second half of the year by increasing 1.99 percent and 4.23 percent in the third and the fourth quarters respectively.
The DGBAS forecast economic growth at 3.67 percent next year as it expects global trading momentum to rebound.
The IMF has forecast that global trade will grow 5.1 percent next year, from a 3.8 percent expansion recorded this year, some positive signals for the nation’s exporters.
The DGBAS also revised upward its forecast for full-year growth in headline inflation index to 1.93 percent, from the 1.9 percent it estimated last year, as heavy rain in June and the current typhoon season may lead to price increases for fruit and vegetables.