The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday cut its forecast for GDP growth this year to 3.28 percent from 3.56 percent, and expects the pace to slow further to 2.81 percent next year as downside risks heighten at home and abroad.
The Taipei-based institute blamed the downward revisions on stubbornly high global inflation and drastic monetary tightening that weakened demand for Taiwanese exports.
“Despite the slowdown, Taiwan should register GDP growth of 3 percent for four straight years, which is pretty good,” CIER president Chang Chuang-chang (張傳章) said.
Photo: Huang Tzu-hsun, Taipei Times
Fewer exports left private consumption to uphold the economy, with a 3.31 percent increase annually, reversing two previous years of downturns induced by the COVID-19 pandemic and disease control measures, Chang said.
Local firms are taking a hard hit from inventory gluts that are expected to persist through the first half of next year, the institute said.
However, exports should grow 11.38 percent annually this year, given solid demand in the first half of the year, CIER researcher Peng Su-ling (彭素玲) said.
The rate is forecast to decline to 2.28 percent next year, as central banks in advanced economies need more time to bring inflation under control, Peng said.
As a result, Taiwan’s trade data is likely to worsen quarter by quarter, Peng said, adding that it is unknown whether GDP growth next year can surpass 3 percent, as the central bank and the Directorate-General of Budget, Accounting and Statistics (DGBAS) have forecast.
DGBAS Minister Chu Tzer-ming (朱澤民) told lawmakers yesterday that the agency would likely need to trim this year’s growth forecast due to disappointing exports.
Listless demand and inventory digestion merit growth corrections, Chu said, adding that the economy this year could have difficulty expanding faster than 3.5 percent.
CIER said it does not think that consumer prices would drop below 2 percent next year, given Taiwan’s dependence on imported energy sources and the local currency’s steep depreciation.
The US dollar has not yet plateaued, and capital outflows are to continue, as portfolio managers re-evaluate asset prices in line with calculations, including interest spread, Chang said.
A weak New Taiwan dollar is favorable for exports, but would intensify imported inflation and capital outflows, he said.
The US dollar has benefited from economic woes, as investors traditionally take shelter in the currency during tumultuous times, National Tsing Hua University professor emeritus Liang Kuo-yuan (梁國源) said.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
At a massive shipyard in North Vancouver, Canadian workers grind metal beams for a powerful new icebreaker crucial to cementing the country’s presence in the increasingly contested arctic. Icebreakers are specialized, expensive vessels able to navigate in the frozen far north. And “this is the crown jewel,” said Eddie Schehr, vice president of production at the Seaspan shipyard. For Canadian Prime Minister Mark Carney, who heads to Norway next Friday to observe arctic defense drills involving troops from 14 NATO states, Canada’s extreme north has emerged as a strategic priority. “Canada is and forever will be an Arctic nation,” he said ahead of
Chinese entrepreneur Frank Gao used to spend long hours running his social media accounts but now outsources the chore to artificial intelligence (AI) agent tool OpenClaw, which is taking China by storm despite official warnings over cybersecurity. OpenClaw, created in November by an Austrian coder, differs from bots such as ChatGPT because it can execute real-life tasks such as sending e-mails, organizing files or even booking flight tickets. “Since January, I’ve spent hours on the lobster every day,” Gao said in an interview, referring to OpenClaw’s red crustacean mascot. “We’re family.” After downloading OpenClaw, users connect it to artificial intelligence models of their
PRICE HIKES: The war in the Middle East would not significantly disrupt supply in the short term, but semiconductor companies are facing price surges for materials Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday. The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict. Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is
RSS