The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday trimmed its forecast for the nation’s economic growth to 3.76 percent from an estimate of 3.91 percent in May, given slowing global trade and weaker export momentum.
It is the second time that DGBAS cut its prediction, after it lowered the figure to 3.85 percent last month. The 0.15 percentage point revision brings the forecast lower than those estimated by most think tanks.
“We have a mild revision because we found that most sectors still report stable growth rather than a drastic correction,” DGBAS Minister Chu Tzer-ming (朱澤民) told a news conference in Taipei.
Photo: CNA
Slower demand for exports is the main reason for the revision, as the IMF had cut its forecast for global trade growth this year to 4.1 percent from five percent given surging inflation, the war in Ukraine war and tightened monetary measures, Chu said.
The agency cut its forecast for the nation’s exports to US$506.7 billion for this year, compared with an earlier estimate of US$516.1 billion.
However, the revised export figures still represent annual growth of 13.51 percent, Chu said.
Imports are forecast to grow faster than exports, by 16.8 percent annually to US$445.6 billion, as domestic manufacturers have significant demand for foreign-made machinery, DGBAS Statistics Department head Tsai Yu-tai (蔡鈺泰) said.
Trade surplus in goods and services is expected to book US$114.1 billion, down from US$115.1 billion last year, the agency said.
As a result, net demand from foreign markets is predicted to contribute 0.85 percentage points to GDP growth, down from 1.85 percent last year and 2.67 percent in 2020, Tsai said.
However, DGBAS boosted its growth forecast for domestic investment to 6.55 percent for the year, up by nearly 2 percentage points from an earlier estimate, as the agency had seen stronger-than-expected momentum, especially from semiconductor companies, offshore wind power developers and solar power farmers, Tsai said.
The agency expects private consumption to peak this quarter, up 6.49 percent year-on-year, given relaxed COVID-19 measures and government programs to spur local travel, Tsai said.
Private consumption this year is expected to rise 3.03 percent from a year earlier, the first annual growth since 2020, the DGBAS said.
The DGBAS yesterday raised this year’s consumer price index growth forecast to 2.92 percent, up from the 2.67 percent it estimated in May, mainly because of a surge in the costs of rental homes and dining out, Chu said.
If accurate, 2.92 percent would be the highest growth since 2009, after 3.52 percent in 2008, Tsai said.
Asked why DGBAS did not raise the figure above three percentage points, as most think tanks had estimated, Chu said that international prices of goods slid month-on-month, and “the second quarter should have been the peak for inflation growth.”
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