The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday trimmed its forecast for GDP growth this year from 4.1 percent to 3.81 percent, as private consumption was softer than expected because of COVID-19 infections and consumer price hikes.
However, the Taipei-based think tank raised its projection for exports and imports, which it said have benefited from robust global demand driven by digital transformation and technological innovations.
TIER Economic Forecasting Center director Gordon Sun (孫明德) attributed the softer GDP projection to weaker-than-expected private consumption in the first six months of the year.
Photo: Allen Wu, Taipei Times
Domestic demand, a main GDP component, would soon improve now that COVID-19 cases have declined, and people have resumed going out and shopping, Sun said.
Private consumption is expected to grow 3.05 percent this year, a drop of 1.38 percentage points from the previous forecast in April, TIER said.
Meanwhile, consumer prices are expected to gain 2.95 percent, subduing the benefits of pay raises, it said.
Private investment remains firm at 4.25 percent, as major tech companies pressed ahead with capacity expansion plans, Sun said.
Despite ongoing tech cycle corrections, TIER increased its growth forecast for exports and imports to 13.16 percent and 16.9 percent on the back of a better performance in the first half.
More than 50 percent of Taiwanese exports are destined for the US and China, but the world’s two largest economies are being affected by the war in Ukraine, as well as steep energy and commodity price hikes, TIER said.
In a related development, companies from various sectors are less confident about their business prospects in the next six months, it said, citing a monthly survey.
The sentiment gauge for the manufacturing industry fell 4.29 points to 92.59, the lowest since June 2020, with companies in the tech sector more pessimistic than those in non-tech fields, it said.
Service providers held relatively resilient in light of a 0.87 point drop in business outlook, TIER said.
Transportation companies, logistics service providers and wholesale operators have negative outlooks, but retailers, hospitality companies and financial institutes have regained some confidence, it said.
Civil engineering companies, property developers and brokers turned conservative, citing rising construction costs and weakening demand, it said.
The confidence measure for builders and realtors fell 3.15 points to 92.92, the worst showing since May 2020, it said.
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