The government yesterday cut its GDP growth forecast for Taiwan to 2.4 percent this year, down from its February estimate of 3.59 percent, citing weaker-than-expected momentum in exports and private consumption.
While the nation’s economy has been losing momentum since the second half of last year, economic recovery is broadly on track, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said.
In line with the global trend, the nation’s economy is “stuck in a soft expansion,” DGBAS section chief Joshua Gau (高志祥) told a press conference, citing forecasts made by IHS Global Insight earlier this month.
Expansion in exports is expected to stand at 2.82 percent this year, far from the 6.21 percent forecast in February, the DGBAS said in its report.
As a result, the DGBAS yesterday revised downward the nation’s output growth forecast to 5.15 percent this year, down from 6.35 percent estimated in February, which drags down the full-year GDP growth estimate by 0.89 percentage points.
The DGBAS also cut its growth forecast for private consumption this year to 1.46 percent from 1.86 percent, because of stagnant growth in real wages and uncertainties about pension reforms.
However, private investment is likely to increase by 7.21 percent this year from last year, on the back of strong investment in capital equipment by the nation’s semiconductor and telecoms sectors, the report said.
DGBAS deputy director Beatrice Tsai (蔡美娜) said the economy would grow 1.98 percent this quarter after expanding 1.67 percent last quarter.
The economy is expected to grow by 2.86 percent next quarter and 2.98 percent in the final quarter of the year, she said.
Fubon Financial Holding Co (富邦金控) chief economist Rick Lo (羅瑋) said he is not pessimistic about Taiwan’s economy this year, expecting GDP to grow about 3 percent.
Lo said the momentum of private consumption in Taiwan may further recover this year on the back of improving performance on the securities market, given that the government is proposing to revise the controversial capital gains tax on securities investments.
Moreover, the government’s plan to provide cash subsidies to consumers in purchasing certain home appliances could boost near-term consumption, he said.
However, slowing economic momentum in China may drag Taiwan’s output down this year, with the US expected to be the most important market to boost Taiwan’s exports, he added.