Taiwan’s real GDP is expected to fall 1.9 percent quarter-on-quarter this quarter due to weak consumption, which would be the first quarterly GDP decrease since a dip of 0.81 percent in the second quarter of last year, Cathay Financial Holding Co (國泰金控) said yesterday.
As COVID-19 infections have risen since the middle of last month and a nationwide level 3 alert has brought strict virus control measures, private consumption lost steam, especially big-ticket spending, said Hsu Chih-chiang (徐之強), a professor of economics at National Central University who heads a research team commissioned by Cathay Financial.
Even a slight dip in private consumption would take a toll on the local economy, as it is an important pillar, Hsu said.
Photo: Allen Wu, Taipei Times
Nominal private consumption was about NT$9.6 trillion (US$342.78 billion) last year, accounting for 48 percent of the nation’s GDP of NT$19.76 trillion, Directorate-General of Budget, Accounting and Statistics (DGBAS) data showed.
“The pandemic has cast a shadow over private consumption for half of the second quarter, but exports, which hit a record at US$37.4 billion last month, have cushioned the impact, or the quarterly decrease might be more severe,” Hsu said.
Consumption could regain momentum in September at the earliest if the outbreak is contained, in which case real GDP growth would return to positive territory with a quarterly rise of 0.8 percent, he said.
“We assumed that the level 3 alert would end on June 28 when we ran the prediction model, but the government today announced an extension to July 12, so consumption recovery might be delayed further,” Hsu said, adding that consumption would not immediately rebound as people would initially be conservative.
Moreover, consumption will not fully recover if vaccination rates are low, but it is difficult to forecast when the vaccination rate in Taiwan would reach 60 percent, an estimated threshold for herd immunity, he said.
Due to the disruption in the second quarter and part of the third quarter, Cathay Financial revised downward its forecast for the annual increase of private consumption to 2.39 percent for the whole of this year from 3.63 percent projected in March, he said.
On a year-on-year basis, real GDP growth is predicted to rise 5 percent, compared with an annual rise of 8.92 percent in the first quarter, Hsu said.
Annual GDP growth is estimated to be 7 percent for the first half of this year, but it would slow to 3 percent in the second half in light of a high comparison base and virus disruptions, he said.
Cathay Financial revised upward its forecast for GDP growth for the whole year to 5 percent from 4.2 percent projected in March on the back of stronger-than-expected exports, Hsu said, adding that this year’s real GDP growth might reach 6 percent if there is no virus surge.
Overall, it is likely that real GDP growth would be higher than last year’s 3.12 percent, he said.
CALL FOR SUPPORT: President William Lai called on lawmakers across party lines to ensure the livelihood of Taiwanese and that national security is protected President William Lai (賴清德) yesterday called for bipartisan support for Taiwan’s investment in self-defense capabilities at the christening and launch of two coast guard vessels at CSBC Corp, Taiwan’s (台灣國際造船) shipyard in Kaohsiung. The Taipei (台北) is the fourth and final ship of the Chiayi-class offshore patrol vessels, and the Siraya (西拉雅) is the Coast Guard Administration’s (CGA) first-ever ocean patrol vessel, the government said. The Taipei is the fourth and final ship of the Chiayi-class offshore patrol vessels with a displacement of about 4,000 tonnes, Lai said. This ship class was ordered as a result of former president Tsai Ing-wen’s (蔡英文) 2018
UKRAINE, NVIDIA: The US leader said the subject of Russia’s war had come up ‘very strongly,’ while Jenson Huang was hoping that the conversation was good Chinese President Xi Jinping (習近平) and US President Donald Trump had differing takes following their meeting in Busan, South Korea, yesterday. Xi said that the two sides should complete follow-up work as soon as possible to deliver tangible results that would provide “peace of mind” to China, the US and the rest of the world, while Trump hailed the “great success” of the talks. The two discussed trade, including a deal to reduce tariffs slapped on China for its role in the fentanyl trade, as well as cooperation in ending the war in Ukraine, among other issues, but they did not mention
Japanese Prime Minister Sanae Takaichi yesterday lavished US President Donald Trump with praise and vows of a “golden age” of ties on his visit to Tokyo, before inking a deal with Washington aimed at securing critical minerals. Takaichi — Japan’s first female prime minister — pulled out all the stops for Trump in her opening test on the international stage and even announced that she would nominate him for a Nobel Peace Prize, the White House said. Trump has become increasingly focused on the Nobel since his return to power in January and claims to have ended several conflicts around the world,
GLOBAL PROJECT: Underseas cables ‘are the nervous system of democratic connectivity,’ which is under stress, Member of the European Parliament Rihards Kols said The government yesterday launched an initiative to promote global cooperation on improved security of undersea cables, following reported disruptions of such cables near Taiwan and around the world. The Management Initiative on International Undersea Cables aims to “bring together stakeholders, align standards, promote best practices and turn shared concerns into beneficial cooperation,” Minister of Foreign Affairs Lin Chia-lung (林佳龍) said at a seminar in Taipei. The project would be known as “RISK,” an acronym for risk mitigation, information sharing, systemic reform and knowledge building, he said at the seminar, titled “Taiwan-Europe Subsea Cable Security Cooperation Forum.” Taiwan sits at a vital junction on
RSS