The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday cut its annual GDP growth forecast for Taiwan to 2.31 percent for this year, from its previous estimate of 2.4 percent in May, citing a sluggish global economic outlook for the second half of the year.
Annual economic growth in the second quarter came in at a higher-than-expected 2.49 percent, from 2.27 percent originally forecast by the DGBAS last month, with GDP growth in the first half of the year standing at 2.06 percent.
However, weaker-than-expected growth in the global economy in the second half of the year was the main factor behind the agency’s downward revision.
“The slowing economic outlook for China and other major emerging economies may drag down demand for Taiwanese products and push down Taiwan’s exports, further making local companies less vigorous in investing,” DGBAS section chief Joshua Gau (高志祥) told a press conference.
The DGBAS cut its forecast for annual GDP growth in the second half of the year to 2.54 percent, from the 2.92 percent it estimated in May, with the economy expected to expand 2.47 percent and 2.61 percent in the third quarter and the fourth quarter respectively from a year earlier.
The agency also set its forecast for Taiwan’s GDP growth next year at 3.37 percent, with the headline inflation rate expected to rise 1.39 percent annually, citing possible economic recoveries in the US and Europe.
DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) said that even if global economic growth next year shows a significant improvement from this year, Taiwan’s economic expansion might not exceed 4 percent because the nation’s export sector has been facing tougher competition than previously.
Currently, the economy is still on a track for a soft expansion, Tsai said, adding that momentum in external and internal demand remains weak.
The government said annual growth in exports could stand at 2.3 percent this year, down from the 2.82 percent rise it forecast in May, reflecting weak external demand.
Private investment growth is expected to reach 5.91 percent this year, a decrease of 1.3 percentage points from the DGBAS’ previous estimate, with the semiconductor industry likely to be the only industry contributing strongly to investments
Despite raising its forecast for annual expansion in private consumption this year to 1.59 percent, up 0.13 percentage points from its previous forecast, Tsai said the sector’s momentum remains weak.
Regarding consumer spending, the consumer price index (CPI) could rise 1.07 percent this year under the DGBAS’ latest forecast, with the government’s move to raise electricity rates in October expected to raise CPI growth by 0.06 percentage points this year.
The move is also expected to drag down the nation’s GDP growth this year by 0.02 percentage points, the DGBAS said.