The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday trimmed its forecast for the nation’s GDP growth this year from 2.72 percent to 2.37 percent, as the COVID-19 outbreak in China has dealt a blow to Taiwan’s exports and private consumption.
The downward revision mainly reflects supply-chain disruptions and weaker consumer activity, which would slow the economy this quarter to a 1.8 percent increase, the weakest gain since the second quarter of 2016, the statistics agency said.
“Exports would bear the brunt as China accounts for 40 percent of Taiwanese exports,” DGBAS Minister Chu Tzer-ming (朱澤民) told a news conference in Taipei.
The outbreak is also interrupting operations of local firms based in China, but it could also hurt the larger market’s demand for electronics, Chu said, adding that poor visibility is limiting the accuracy of the agency’s projections.
International research bodies have not yet adjusted their growth forecasts to account for the outbreak, the DGBAS said.
The outbreak might dent the nation’s economy by between 0.35 percentage points and 0.5 percentage points this year, if it can be contained in three months, Chu said.
That would be less serious than the 2003 SARS outbreak that erased 0.57 percentage points from Taiwan’s GDP growth that year, he said.
Exports of goods and services are now expected to grow only 1.73 percent this year, down 0.96 percentage points from the previous estimate, after factoring in a sharp decline in tourist arrivals, Chu said.
To cope with the fallout of the outbreak, five-star hotels have been offering discounts and takeouts.
Upscale mall operator Breeze Group (微風集團) is reportedly reducing its staff by 30 percent, as visitors to Taipei’s Xinyi District (信義) have dropped by 70 percent, local Chinese-language media reported yesterday.
Private consumption, which accounts for more than 50 percent of GDP, is expected to squeeze a 0.75 percent increase this quarter and expand 1.58 percent this year, the DGBAS said.
The prediction suggests a downgrade of more than 50 percent from the agency’s earlier estimate.
The DGBAS reduced its forecast for this year’s private investment growth by 0.95 percentage points to 3.1 percent, after last year’s figure proved much stronger, with an increase of 9.61 percent from 7.61 percent.
DGBAS also revised down GDP growth for last year to 2.71 percent, 0.02 percentage points lower than data released last month.
The adjustment came after the economy grew 3.31 percent in the final quarter of last year, 0.07 percentage points softer than previously reported.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s