The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday trimmed its growth forecast for this year and next year, as exports and private consumption lost steam amid global trade tensions and financial market retreats.
The agency cut its growth forecast for this year from 2.69 percent to 2.66 percent and lowered the estimate for next year from 2.55 percent to 2.41 percent.
It was the first downward revision in a year, as robust exports earlier in the year drove the government and private research bodies to raise projections.
Photo: Cheng Chi-fang, Taipei Times
The economy remains on a course of expansion, but the pace has slowed noticeably, DGBAS Minister Chu Tzer-ming (朱澤民) told a news conference in Taipei.
“A tariff dispute between the US and China hurt business confidence, while the stock rout dampened private consumption,” he said.
Consequently, Taiwan’s export-reliant economy grew 2.27 percent in the third quarter, missing a 2.36 percent increase the agency predicted in August, he added.
External demand dragged on GDP readings, as imports advanced faster than exports, the agency said in a report.
New smartphones failed to increase business for local firms in their supply chains, as evidenced by their declining revenue contributions, Department of Statistics Director-General Yeh Maan-tzwu (葉滿足) said, alluding to Apple’s new iPhone models.
Taiwanese companies supply chips, touch panels, camera lenses, casings and other components used in iPhones and other brands’ smartphones.
Aware of the trend, local firms have increasingly shifted focus to business opportunities linked to connected vehicles, artificial intelligence (AI) and Internet of Things applications, Yeh said.
Exports might still rise to a record high this year with growth of 6.2 percent, but the pace might moderate to 1.96 percent next year, the report said.
Imports might grow a faster 2.64 percent next year, compared with an estimated 11.02 percent pickup for this year, aided by higher oil and raw material costs, as well as depreciation of the New Taiwan dollar against the US dollar.
The forecast suggests that domestic demand would drive growth next year with a 2.26 percent increase, the report said.
Private consumption is expected to gain 2.23 percent, while private investment might rise 4.12 percent, despite their lackluster performance this year, it said.
Consumer spending grew 1.8 percent last quarter, softer than the forecast in August, as a tumultuous bourse subdued a wealth effect seen in the first half of this year and last year, Yeh said.
Major technology firms have indicated plans to postpone capital expenditure, warranting a slash in private investment for this year, she said.
The nation’s semiconductor firms maintain competitive edges on the world stage, making them less susceptible to the trade dispute, she added.
The government would lend support with an 11.03 percent increase in public construction works next year, Chu said, adding that more stimulus measures are desirable to shore up consumer spending.
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