Academia Sinica yesterday cut its forecast for Taiwan’s GDP growth this year to 1.15 percent, from its estimate of 2.58 percent growth seven months ago, to reflect the COVID-19 pandemic’s effects on exports and private consumption.
The downward revision of more than 50 percent made the Nangang-based think tank the second-most conservative among local research institutes, next only to the Chung-Hua Institution for Economic Research (中華經濟研究院), which is looking at 1.03 percent growth.
“Despite an abrupt and deep global recession caused by the virus outbreak and lockdown measures, Taiwan has embarked on a gradual recovery, supported by local high-tech industries and a prodigious increase in government spending,” Academia Sinica research fellow Ray Chou (周雨田) told a media briefing.
The worst is likely over and things might improve quarter by quarter, Chou said.
Many electronics suppliers released robust sales data last month and expect business to remain strong on the back of continued demand for remote learning and working arrangements.
Taiwan Semiconductor Manufacturing Co (台積電), which supplies chips for the world’s major chip designers and smartphone brands, last month posted record revenue that accounted for 40 percent of overall semiconductor exports, government data showed.
The world’s largest contract chipmaker is to hold an investors’ conference today and discuss business going forward.
Still, soaring virus infections in many parts of the world pose grave uncertainty and curtail growth momentum for Taiwan in light of its heavy reliance on global trade, Academia Sinica Institute of Economics director Chen Kong-Pin (陳恭平) said.
Exports might shrink 3.72 percent, while imports might contract 4.13 percent, leading to a 1.49 percent decline in the trade surplus, Academia Sinica said.
The government is lending support by expanding its consumption by 2.86 percent and investment by 10.9 percent, it said.
The Cabinet has asked the Legislative Yuan to approve an extra NT$200 billion (US$6.76 billion) in relief funds to bail out financially stressed companies.
The decline in private consumption might widen from 1.58 percent in the first quarter to 2.2 percent last quarter, but swing to a pickup of 1.2 percent this quarter and 1.29 percent next quarter, Academia Sinica said.
The unemployment rate would climb to 4 percent this year as the graduation season would drive up the number of first-time jobseekers, while the number of furloughed workers might ease, it said.
Private investment is another silver lining, with a projected 2.05 percent increase this year, thanks to technology upgrade efforts and companies returning from China, it said.
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