The Taiwan Research Institute (TRI, 台灣綜合研究院) yesterday cut its forecast for the nation’s GDP growth this year to 1.55 percent, from the 2.63 percent it predicted in December last year, saying that the COVID-19 pandemic is hurting exports and consumer spending.
The New Taipei City-based think tank said it expects exports and private consumption to contract 3.08 percent and 0.29 percent respectively, despite government efforts to ease the pain from the pandemic and energize domestic demand.
“Taiwan will manage to achieve growth this year, thanks to the government’s efficient control of the virus outbreak, but uncertainty abroad remains high,” TRI president Wu Tsai-yi (吳再益) told an economic forum.
The ongoing worldwide economic downturn induced by lockdowns would hamper growth momentum for domestic and external demand in light of Taiwan’s heavy exposure to global trading activity, Wu said.
Taiwan’s main export destinations — China, the US, Europe, Japan and ASEAN — have all been heavily affected by the pandemic.
Although some local firms have benefitted from demand for remote working and learning, as well as e-commerce, most sectors have felt the pinch, the institute said.
Major economic barometers such as the purchasing managers’ index, exports and employment rates all pointed downward, the TRI report said.
Things would improve in the second half of the year, the high season for technology products, it said.
Consumer activity already started to pick up in May and would gain further traction following the distribution of stimulus vouchers next week, TRI said.
The number of furloughed workers this week dropped 5,990 due to a recovery in dining activity and domestic travel, the Ministry of Labor said.
The TAIEX this month recovered all of its losses and yesterday finished near a 30-year high at 12,192.69 points with turnover of NT$249.311 billion (US$8.43 billion), Taiwan Stock Exchange data showed.
TRI chairman Liu Tai-ying (劉泰英) warned that the stock market is overheating and there is a danger the bubble would burst.
Liu attributed worldwide market rallies to quantitative easing from global central banks to prevent credit crunches and support their economies.
“Individual investors better not take part in the stock fever that may soon be corrected, but they always do,” Liu said.
The TRI said it expects consumer prices to decline 0.23 percent and wholesale prices to shrink 3.97 percent. The local currency would trade at an average of NT$29.860 against the US dollar, it said.
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