The nation’s GDP growth could slow to 2.72 percent next year, from an estimated 3.04 percent pickup this year, as global economic headwinds could hurt demand for Taiwanese exports, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The projection is slightly more conservative than the Directorate-General of Budget, Accounting and Statistics’ forecast of 2.75 percent growth and could be revised further downward after exports last month fell faster than expected.
External demand could make virtually no contribution next year, when the global economy is expected to grow only 2 percent, with the US and Europe heading toward a recession induced by monetary tightening to curb inflation, CIER president Chang Chuang-chang (張傳章) said.
In addition, the Ukraine war and China’s tight COVID-19 controls would continue to slacken global trade, Chang said.
The backdrop is unfavorable for Taiwan, which depends heavily on exports of electronics used in smartphones, notebook computers, TVs, wearables and vehicles.
Domestic demand would lend support to the economy, with a projected 4.26 percent increase in private consumption, a 2.98 percent pickup in government expenditure and a 2.2 percent rise in private investment, CIER said.
However, that implies a sharp contraction in private investment, which is forecast to grow 7.01 percent this year after rising 17.27 percent last year, the Taipei-based think tank said.
Major manufacturers have cut or postponed capital spending and arranged annual maintenance to cope with business downturns and order cancelations.
Exports this quarter are forecast to contract 6.26 percent and remain in the woods in first half of next year, CIER said.
Some academics have warned that inventory adjustments would persist longer, as the pinch of interest rate hikes in the US would grow more evident next year.
The consumer price index would expand by 1.97 percent next year, falling within the central bank’s 2 percent target, after an estimated 2.94 percent gain this year.
International raw material prices have noticeably declined due to slack demand, the institute said.
The Cabinet on Thursday extended tax cuts on imported commodities and critical raw materials by another three months to March to help tame imported inflation.
Imported inflation has received support from a weak New Taiwan dollar linked to capital outflows this year, government data showed.
The NT dollar is likely to trade at an average of NT$31.09 versus the greenback next year, from NT$29.82 this year, CIER said.
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