The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday raised its forecast for Taiwan’s GDP growth this year to 6.09 percent, citing strong private investment as tech firms aggressively upgraded and expanded capacity to meet global demand.
GDP growth next year is expected to be 4.15 percent, up from a previous estimate of 3.69 percent, as capacity expansions would translate into actual exports, the main growth driver, DGBAS deputy head Tsai Hung-kun (蔡鴻坤) told a news conference in Taipei.
Capital formation gained 41.21 percent in the third quarter, with semiconductor equipment and manufacturing capital equipment imports spiking 58.9 percent and 11.73 percent respectively, the agency said in a report.
Photo: Annabelle Chih, Reuters
Taiwan is home to the world’s largest contract suppliers of chips used in smartphones, laptops, TVs and vehicles, as well as artificial intelligence and Internet of Things applications.
Customers around the world have pressed local makers to increase supply to ease shortages that have slowed vehicle production.
Local shipping and construction companies also contributed to capital formation, which added 7.2 percentage points to third-quarter GDP, more than muting a 5.6 percent decline in private consumption, it said.
GDP growth last quarter was 3.7 percent, down 0.1 percentage points from data published late last month, Tsai said.
Private investment is expected to grow 18.88 percent this year, the most since 2011, as firms move manufacturing facilities to Taiwan from abroad, boosting exports, he said.
The trend explained why exports last month surpassed US$40 billion for the first time, he said, adding that such volumes would become normal.
The DGBAS trimmed its forecast for full-year export growth by 1.18 percentage points to 16.75 percent and raised its imports forecast by 0.67 percentage points to 18.49 percent.
Tsai attributed the revision in exports to supply chain bottlenecks.
Soaring raw material prices and congestion at ports have created chaos for production schedules and delivery times, he said.
Private consumption would become a bright spot next year, with an expected 5.36 percent advance, but would show growth of only 0.07 percent this year, because a recovery is not evident, Tsai said.
The situation would improve, aided by effective controls for COVID-19 and the government’s stimulus measures, he said.
The DGBAS said that it expects consumer prices to rise 1.98 percent this year and moderate to 1.61 percent next year.
A pay increase of 5 percent next year would mitigate the pinch, Tsai said, adding that Taiwan is catching up with South Korea in per capita income and might overtake it in 2025.
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