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.
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