The Directorate-General of Budget, Accounting and Statistics (DBGAS) yesterday cut its forecast for Taiwan’s GDP growth this year to 1.42 percent from 1.61 percent amid disappointing exports and private investment data, but said that the economy would gain momentum from this quarter.
If the revised projection bears out, it would be Taiwan’s worst economic performance since 2008, DGBAS Minister Chu Tzer-ming (朱澤民) said, adding that tepid end-market demand and lingering inventory adjustments had forced the cut.
Exports are expected to decline 9.90 percent this year, while imports would tumble 16.87 percent, both worse than the projections in August, Chu said.
.Photo: CNA
Taiwan is home to the world’s main contract suppliers of electronics used in smartphones, personal computers, vehicles and artificial intelligence applications.
Although major central banks have halted monetary tightening, high interest rates continue to curtail corporate investment and consumer spending, Chu said.
That is why the IMF last month trimmed its growth forecast for global trade by 1.1 percentage points to 0.9 percent, which is unfavorable for Taiwan’s export-reliant economy, he said.
However, the clouds have started to dissipate, he said.
The the economy is set to expand 5.22 percent this quarter as technology brands launch new-generation gadgets and restock inventory ahead of the holiday season, he said.
Exports would rise 2.89 percent in the October-to-December period, but imports would contract 7.45 percent due to languid interest in purchases of input materials and capital equipment on the part of local firms, the DGBAS said.
Private investment would slump 11.91 percent this quarter, easing from a 13 percent fall last quarter, as firms stood by a cautious business approach to cope with geopolitical tensions and restrictive interest rates, Chu said.
The GDP component would fall 9.81 percent for the whole of this year, much more than the 5.93 percent retreat the statistics agency predicted three months earlier, the DGBAS said.
Private consumption helped buoy the nation’s economy this year with an 8.36 percent increase as people emerged from COVID-19 restrictions, it said.
Exports and private investment would once again be growth drivers next year, helping lift GDP to 3.35 percent, a mild gain from the estimate in August, Chu said.
“We are looking at stable growth in exports, private investment and consumer spending,” he said, adding that low bases also help.
Major tech firms would raise capital expenditure to maintain their leadership positions in advanced technology processes, while domestic airline companies are expanding their fleets to meet demand for cargo and passenger services.
The government has announced a 4 percent rise in the minimum wage next year, which would help private consumption remain healthy, Chu said.
Consumer prices would return to near the central bank’s target of 1.64 percent, although they are set to rise 2.46 percent this year as bad weather drove up fruit and vegetable prices, he said.
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