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.
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.
ECONOMY TWEAK: Lowering the rate would allow more cities in China to reduce minimum mortgage rates for homebuyers, which might stimulate sluggish demand China yesterday ramped up support for its property sector with its biggest-ever cut to a key mortgage reference rate, raising expectations for more aggressive measures to support the economy in the months to come. Chinese lenders slashed their five-year loan prime rate (LPR) by 25 basis points to 3.95 percent, the People’s Bank of China said. It was the first cut since June last year and the largest reduction since a revamp of the rate was rolled out in 2019. Lowering that rate will allow more cities in China to reduce minimum mortgage rates for homebuyers, which might stimulate sluggish demand for apartments
OVERSEAS: The company is expanding with OSAT development in India, an EV factory in Thailand and possibly an 12-inch fab in Malaysia, Young Liu said Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, is expected to forge deeper and more comprehensive collaborations with its main customer Apple Inc, the company’s chairman said on Tuesday. Speaking before a dinner banquet on Tuesday to mark the company’s 50th anniversary, Hon Hai chairman Young Liu (劉揚偉) said that the two companies would forge a deeper and more extensive partnership. “Everything that should be there will be there and nothing will be missed,” Liu said, when asked about the progress made in Hon Hai’s collaborations with Apple in the artificial intelligence and electric vehicle (EV) fields. Hon
UP AND DOWN: Although average regular monthly pay rose 2.43 percent to NT$45,496 last year, sharper inflation of 2.5 percent drove real monthly wages down 0.05 percent The labor market improved last year with a rise in employment, as well as monthly take-home pay and total wages, but faster inflation wiped out those increases, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The industrial and service sectors hired 7,000 people, a 0.09 percent increase from the previous year, to grow the workforce to 8.17 million people, as retailers, hospitality and tourism companies benefited from “revenge” consumption in the post-COVID-19-pandemic era, the agency said. Strong consumer spending more than offset a slowdown that hit manufacturers and shrank their payroll by 0.74 percent, it said. Steep global inflation and monetary
SLOWING DOWN: Last year, new investment in China from Taiwanese firms fell to its lowest since 2001, while that of Japanese firms also fell to a 10-year low Foreign businesses’ direct investment into China last year increased by the lowest amount since the early 1990s, underscoring challenges for the nation as Beijing seeks more overseas funds to help its economy. China’s direct investment liabilities in its balance of payments was US$33 billion last year, data released on Sunday by the Chinese State Administration of Foreign Exchange showed. That measure of new foreign investment into the country — which records monetary flows connected to foreign-owned entities in China — was 82 percent lower than the 2022 level and the lowest since 1993. The data show the effect of COVID-19 lockdowns and weak