Taiwan’s GDP is forecast to grow 2.9 percent this year, with the adverse effects of US President Donald Trump’s “reciprocal” tariffs expected to become more apparent in the second half of the year, the Taiwan Research Institute (TRI) said on Friday.
The institute’s forecast is lower than the Directorate-General of Budget, Accounting and Statistics’ estimate late last month of 3.1 percent growth.
Local economic growth is expected to slow in the second half of the year, as rush orders from foreign buyers seeking to avoid tariffs likely shrink as Washington’s tariff policies become clearer, the TRI said.
Photo: CNA.
Trump on April 2 announced reciprocal tariffs on countries that have high trade surpluses with the US. That included a 32 percent import duty on goods from Taiwan, but a week later, Trump announced a 90-day pause to allow negotiations for a lower levy.
TRI president Wu Tsai-yi (吳再益) said Taiwan is expected to face growing challenges in the second half of this year, with a decline in orders.
The institute forecast that Taiwan’s economy is likely to grow 4.95 percent in the second quarter after growing 5.34 percent in the first quarter.
However, growth is expected to slow sharply to 0.78 percent in the third quarter and 0.84 percent in the fourth quarter, it said.
Taiwan’s exports in merchandise and services are expected to increase 9.82 percent this year, on the back of solid global demand for emerging technologies, such as artificial intelligence applications and high-performance computing devices, it said.
Strong global demand for tech gadgets prompted local manufacturers to invest more in boosting production capacity, the institute said, adding that private investment would grow 4.54 percent this year, with capital formation, which includes private and public investment, forecast to grow 4.57 percent.
Uncertainties over the global economy have sent ripples through the local stock market and dampened consumer sentiment this year, which would limit private consumption in Taiwan to grow only 1.5 percent, it said.
TRI founder Liu Tai-ying (劉泰英) said an unpredictable Trump is expected to add more uncertainty to the global economy, while the weakness of the US dollar has led to a stronger New Taiwan dollar, with foreign exchange losses expected to place pressure on Taiwan’s exporters and life insurance companies, which hold large foreign assets.
The institute forecast that the exchange rate of the NT dollar to the greenback would hit an annualized average of NT$30.69 this year, compared with NT$32.11 last year.
In addition, the consumer price index would grow 1.98 percent this year, below the 2 percent alert set by the central bank, it said.
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