Academia Sinica yesterday cut its forecast for the nation’s GDP growth this year to 2.64 percent and said it expects it to slow further to 2.45 percent next year, as trade tensions are likely to continue to influence financial markets.
“Downside risks have suppressed growth momentum in Taiwan,” Academia Sinica research fellow Ray Chou (周雨田) told a news conference.
The global scene is increasingly unbalanced, as the US economy remains healthy, but Europe and Japan are faring poorly, Chou said.
Demand from China, Taiwan’s largest trade partner, has taken a hit and firms have negative views on their business prospects, the economist said.
The changes merit a slight downward revision for GDP growth this year, which was previously estimated to be 2.65 percent, Chou said, adding that wild fluctuations across global financial markets have worsened the pervading sense of unease.
The nation’s export-oriented economy might increase only 1.95 percent this quarter, a traditional high sales season for technology products, Chou said.
Taiwan is home to some of the world’s largest manufacturers of chips, camera lenses, batteries and other critical components used in smartphones, laptops and TVs.
Sales of Apple Inc’s new iPhone series have failed to meet expectations, adding to the slowdown this year and beyond, Institute of Economics director Kamhon Kan (簡錦漢) said.
Exports and imports are expected to rise 3.55 percent and 4.81 percent this year, and might slow to 3.11 percent and 3.01 percent respectively next year, the institute’s report said.
Demand for emerging technology applications and automation would continue to shore up business for local electronics and machinery suppliers, it said.
Private investment could expand 3.17 percent this year and accelerate to 4.31 percent next year, as the government is removing investment barriers to facilitate capital repatriation, the report said.
Several firms based in China have indicated that they plan to move manufacturing facilities back to Taiwan to avoid the extra tariffs imposed on Chinese goods by Washington.
GDP might also benefit from spending on infrastructure projects, the report said.
Private consumption, which proved disappointing last quarter amid a stock rout, could gain 2.16 percent this year, sustained by a stable job market and the peak sales season this quarter, it said.
Consumer spending might grow 2.26 percent next year on the back of a basic wage hike and benign consumer prices, the report said.
The US-China trade spat, a slowdown in demand from China and financial market tightening could continue to weigh on the global economy and Taiwan’s trade performance, Academia Sinica said.
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