British banking group Barclays PLC yesterday cut its estimate for the nation’s economic growth for this year, due to the impact of adulterated oil scandals on consumption, and weak activity in the real-estate sector.
Barclays’ forecast for the year’s GDP growth was trimmed by 0.5 percentage points to 3.6 percent, although the bank maintained its projection for next year at 4.5 percent.
The revision came after the country’s third-quarter GDP showed a disappointing quarterly growth of 0.5 percent, as a number of key service sectors slowed unexpectedly, even as manufacturing did better, Barclays senior regional economist Leong Wai Ho (梁偉豪) said.
“One headwind we had underestimated was the impact of the adulterated oil scandal — the discovery of adulterated oil widely used in the manufacture of local food — on consumption,” Leong wrote in a research note.
Another weak spot was real estate and construction activity, which also slowed much faster than expected in the third quarter, he said.
Looking ahead to next year, Leong said the downside risks are likely to be offset by factors arising from lower fuel prices, as well as recent changes to national accounting, including reclassifying research and development expenditure as fixed investments and adopting the chain-weighting method for calculating GDP.
Moreover, the number of visitors from China to Taiwan rose 37.7 percent year-on-year between January and October compared with a 13.4 percent growth in the same period last year, partly reflecting a diversion of China’s tourist flow from Southeast Asia to Northeast Asia, Leong said.
He estimated that Chinese visitors would spend US$6.5 billion in Taiwan’s service sector next year, representing an 8 percent growth from this year.
“We expect a continued tourism boom and lower oil prices to help support service employment and domestic demand in 2015. This could buffer any cooling in electronics exports,” the economist added.
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