The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday stood by its forecast for the nation’s economy this year and next year, saying its projection would be justified.
In August, the DGBAS raised its forecast for GDP growth this year to 2.46 percent, saying exports were better than expected and could improve further.
DGBAS Minister Chu Tzer-ming (朱澤民) defended its August forecast at a hearing of the Legislative Yuan’s Finance Committee, saying that he also expected improvement next year.
“Time will tell which agency is correct about the economy’s future,” Chu told the committee after lawmakers said that the DGBAS was more upbeat than other major research institutes.
Yuanta-Polaris Research Institute (元大寶華綜經院), the central bank and the Taiwan Institute of Economic Research (台灣經濟研究院) predicted milder GDP growth for this year and expect a slowdown next year, with the US and China tipped to be more affected by their trade dispute.
China and the US, the world’s top two economies, account for nearly 60 percent of Taiwan’s exports.
However, Chu said that improvement in private investment would help mitigate soft external demand this year and would be a greater catalyst next year.
“More firms returning from China would fulfill their investment pledges,” he said.
As of last week, the Ministry of Economic Affairs had processed combined investment pledges of NT$615.2 billion (US$19.9 billion) by 146 firms shifting production out of China to avoid US tariffs.
“Most companies will realize their investment plans next year, as it takes time to build factories and acquire capital equipment from abroad,” Chu said.
Wind farm projects would start to operate and contribute to GDP growth next year, he added.
With investment repatriation and trade diversion, Taiwan’s GDP might outperform other trade-dependent economies in the region in the second half of this year, DBS Bank said.