The government yesterday cut its economic growth forecast for this year to 1.47 percent, from the 2.32 percent it projected in November last year, as the nation’s heavy dependence on exports and a few industries grows increasingly unsustainable amid a global slowdown and ever-shifting technology trends.
Exports, which account for 60 percent of GDP, are now projected to shrink 2.78 percent this year, the second consecutive year of contraction, as demand for mobile devices slows, hurting Taiwanese firms in the global supply chain, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said in a report.
“The economy is lacking in growth momentum, though it might increase mildly this year as it did last year,” DGBAS Minister Shih Su-mei (石素梅) told a news conference.
The statistics agency also trimmed GDP growth for last year to 0.75 percent, from the 0.85 percent estimated last month, while it raised the pace of decline for last quarter from 0.28 percent to 0.52 percent.
Disappointing economic data necessitated the downward revisions and downside risks continue to loom, DGBAS statistics division head Wu Pei-hsuan (吳佩璇) said, adding that the global economy has been weaker than expected so far this year and crude oil prices have not yet stabilized.
The trends are unfavorable for world information technology spending, which might manage a mere 0.6 percent increase this year, driven mainly by software innovations rather than hardware, Wu said.
Taiwan is home to the world’s largest electronics component suppliers, providing chips, camera lenses, casings, batteries and other parts for Apple Inc’s iPhone and iPad.
The overconcentration on exports and a few industries make the nation vulnerable to a slowdown in Apple sales, DGBAS statistics division director Tsai Hung-kun (蔡鴻坤) said.
“Gone is the era when mobile devices registered rapid growth and benefitted firms in their supply chain,” Tsai said.
Exports are expected to remain in negative territory in the first half of the year and stage a humble comeback in the third quarter, with the launches of new-generation electronic devices, the statistics agency forecast.
The seasonality-driven forecast proved to be inaccurate last year due to a lack of breakthrough innovations.
Poor exports mean domestic demand will have to prop up the economy this year, with private consumption forecast to grow 1.36 percent and private investment to pick up 1.98 percent, the report said.
Semiconductor firms have bought new equipment to maintain technology leadership and airliners have made known plans to replace old fleets, Wu said.
The government is to lend a helping hand by raising public works spending by 5.05 percent, the first increase since 2000, the report said.
Consumer prices could expand only 0.69 percent this year, curbed by lingering crude oil price disruptions, the report said.
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