DBS Bank Taiwan (星展台灣) yesterday said it was adopting a much more conservative outlook for Taiwan’s exports this year than the Directorate-General of Budget, Accounting and Statistics (DGBAS) has forecast, due to slowing demand from China, the nation’s largest export market.
Taiwan’s exports are expected to grow 6.2 percent year-on-year this year, lower than the DGBAS’ 14 percent forecast.
“Our outlook is much different from that of DGBAS because we have varying predictions for China’s economy.” Singapore-based DBS economist Ma Tieying (馬鐵英) told an online news conference.
Photo: CNA
“While some agencies think China’s economy has bottomed out and will improve in the second half of the year, we are more conservative on this,” Ma said. “Although China’s COVID-19 controls have eased, their effects are likely to linger in the second half.”
Given high unemployment among young Chinese, sluggish investment by manufacturers and a growing real estate crisis, China’s demand is likely to be weakening, she said.
Although some institutions expect Chinese regulators to implement economic stimulus programs, DBS has reservations about such prospects, Ma said.
Disruptions to suppliers and logistics eased after China’s lockdown measures ended, but end-market demand cannot rebound so quickly, and Taiwan’s exports to China could easily lose steam, she said.
“Although Taiwan’s export orders appeared rosy last month, growing 9.5 percent annually to hit their highest for June at US$58.83 billion, if you take a closer look, you will find that export orders to China fell 14.5 percent from a year earlier,” Ma said.
The conservative export outlook was the main reason that DBS cut Taiwan’s GDP growth forecast to 3.4 percent from 3.8 percent, Ma said.
Taiwan’s China exports fell 15.8 percent year-on-year last month, although cumulative exports to China remained in positive territory in the first half of this year, with annual growth of 4.5 percent to US$62 billion, Ministry of Finance data showed.
DBS forecast Taiwan’s economy to grow 2.8 percent next year, compared with 3.4 percent this year and 6.6 percent last year, it said.
“There is no concern of recession for Taiwan, but economic growth is expected to decelerate, affected by a slowing global economy and a correction in the technology business cycle,” Ma said.
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