Annual GDP growth last quarter expanded 3.02 percent, marginally slower than an official forecast of 3.04 percent made last month, as private consumption and travel income turned out slightly lower.
However, the Directorate-General of Budget, Accounting and Statistics (DGBAS) raised its forecast for economic growth this year from 2.42 percent to 2.6 percent, citing better-than-expected exports and private spending, which should be sustainable for the rest of the year.
“We are more positive about the domestic economy after major international research bodies recently upgraded their global GDP growth forecasts,” DGBAS Minister Chu Tzer-ming (朱澤民) said at a news conference.
Faster growth in advanced and emerging economies is favorable for Taiwan’s exports, which are forecast to increase 6.36 percent this year, compared with the 4.54 percent growth the statistics agency projected in February, its report showed.
The demand for high-performance computing chips, as well as devices used in connected vehicles, Internet of Things applications and other new technologies, has continued to gain strength, Chu said.
Taiwanese semiconductor firms have maintained their technology leadership and are benefitting from ever-changing technology trends, he said.
The agency has revised up its private investment projection mainly because Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker, lifted its target capital expenditure for this year by US$1 billion, Department of Statistics Director-General Yeh Maan-tzwu (葉滿足) said.
Real private consumption is forecast to grow 2.53 percent, faster than its February estimate of 2.45 percent, Yeh said, adding that domestic demand has received further support from a pickup in restaurant and retail sales, as well as inbound tourism.
“Various government measures to improve personal income and spending appear to have borne fruit, enabling domestic demand to be the main growth driver this year,” Chu said, referring to a pay raise for government employees and an infrastructure enhancement project.
The DGBAS now expects consumer prices to rise 1.49 percent this year, compared with its prior estimate of 1.21 percent, as global crude oil prices are likely to average US$67.8 a barrel, higher than its previous estimate of US$61.7 a barrel, Chu said.
Wholesale prices are expected to grow at a faster 2.42 percent, compared with its previous forecast of 0.62 percent, now that the New Taiwan dollar’s appreciation has subsided and it is less able to absorb price hikes on international raw materials and commodities, he said.
Oil price hikes are unfavorable to GDP growth in Taiwan because of its heavy dependence on oil imports, he said.
Apart from oil prices, a trade war between China and the US and tumultuous global equity markets could also weigh on the nation’s economic performance, he added.
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