The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday trimmed its forecast for GDP growth this year to 2.12 percent, down 0.63 percentage points from its previous projection, as exports and private investment are expected to weaken amid economic uncertainty.
The projected growth rate is lower than the revised 2.43 percent expansion for last year, which the agency attributed to a lingering global economic slowdown constraining demand for goods and services, which is unfavorable for Taiwan’s export-oriented economy.
Exports, usually a main growth driver, are forecast to contract 5.84 percent this year, with double-digit percentage retreats in the first two quarters and a 2.29 percent fall in the third quarter before rising again in the fourth quarter, DGBAS Minister Chu Tzer-ming (朱澤民) said.
Photo: Clare Cheng, Taipei Times
Lingering inflation and drastic monetary tightening by central banks in advanced economies have prompted consumers to cut spending on nonessential items, Chu said.
Those issues led firms to take a cautious approach on inventory management and to cut capital expenditures, DGBAS Statistics Department head Tsai Yu-tai (蔡鈺泰) said.
Private investment is expected to shrink 1.13 percent this year, compared with 6.33 percent, 18.9 percent and 12.03 percent annual increases from 2019 to 2021, DGBAS data showed.
Photo: CNA
Taiwan Semiconductor Manufacturing Co (台積電), the sole chip supplier to Apple Inc’s iPhone series, reduced its capital spending this year from US$40 billion to between US$32 billion and US$36 billion, while other tech firms have also cut spending, Tsai said.
The trend is expected to weigh on GDP despite continued support from investors in the development of renewable energy, he said.
“It is common for companies to tighten their belt in the face of economic uncertainty,” Tsai added.
However, he said private consumption would increase 5.24 percent, down 0.24 percentage points from the agency’s prediction in November last year.
Eased COVID-19 restrictions have enabled the tourism and recreational sectors to recover quickly, Chu said, adding that the number of overseas trips made by Taiwanese is expected to rise.
The government’s plan to distribute NT$6,000 per person next quarter might boost consumer spending by 0.35 to 0.45 percentage points, if people spend the money in Taiwan rather than save it, or spend it on foreign goods or services, Chu said.
Inflation would be 2.16 percent this year, higher than the central bank’s 2 percent target, the agency said.
That marked an upward revision of 0.3 percentage points, driven by higher dining prices and housing costs, Chu said, adding that landlords have raised rents and major restaurant chains have announced price increases to reflect higher food costs.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS