Taiwan's Directorate General of Budget, Accounting and Statistics (DGBAS) has lowered its forecast of Taiwan's gross domestic product (GDP) growth for 2022 slightly to 3.76 percent in the wake of weaker exports and a fall in private consumption.
In a statement released on Friday, the DGBAS joined a growing list of institutes which have downgraded their forecasts for Taiwan's 2022 economic growth and said it had revised the country's GDP growth down by 0.15 percentage points from its previous estimate of 3.91 percent made at the end of May.
In July, Academia Sinica, the top research institute in Taiwan, lowered its economic growth forecast for Taiwan in 2022 from 3.85 percent to 3.52 percent, while the Chung-Hua Institution for Economic Research (CIER), another leading think tank in Taiwan, cut its projection from 3.96 percent to 3.56 percent.
The DGBAS said the global economy had been impacted by Russia's invasion of Ukraine and fast-growing inflation, which have prompted major central banks in the world to kick off a rate-hike cycle, while China's massive lockdowns to rein in COVID-19 outbreaks have also interrupted economic activities worldwide.
Under such unfavorable circumstances, with global demand having weakened and border controls to fend off COVID-19 having limited travel spending, the DGBAS has cut its growth forecast of Taiwan's imports in merchandise and services for 2022 by 0.01 percentage points from its earlier estimate to 5.84 percent.
However, the DGBAS has raised its growth forecast of Taiwan's imports in merchandise and services for 2022 by 1.35 percentage points from its earlier estimate to 5.87 percent as manufacturers in Taiwan have been keen to spend more on capital equipment.
An increase in domestic COVID-19 cases dampened consumers' willingness to spend in the first half of this year before buying interest recovered later due to the government's stimulus measures as well as wage hikes by enterprises and cash dividend payouts from companies, the DGBAS said.
As a result, the DGBAS has cut its forecast of Taiwan's private consumption growth by 0.07 percentage points to 3.03 percent.
Bucking the downward revisions, the DGBAS has upgraded private investment growth by 1.94 percentage points to 6.55 percent as the manufacturing sector, in particular semiconductor suppliers, continued to expand production capacity. The 2022 capital formation growth is now expected to hit 6.14 percent.
In the first half of this year, Taiwan's GDP grew by 3.38 percent from a year earlier. The DGBAS said the local economy was expected to grow by 4.71 percent and 3.53 percent, respectively, in the third and fourth quarters of the year.
Forecast for 2023
As for 2023, the DGBAS said Taiwan's GDP is expected to grow by 3.05 percent from a year earlier with exports and imports forecast to grow by 5.05 percent and 7.02 percent, respectively, from 2022.
The DGBAS said private consumption and private investment for 2023 are expected to rise by 4.88 percent and 3.43 percent, respectively, from a year earlier. Capital formation is expected to grow by 3.68 percent next year.
With higher dining out costs and increasing rents, Taiwan's consumer price index (CPI) is expected to grow by 2.92 percent in 2022, an upgrade of 0.25 percentage points from the previous forecast, the DGBAS said.
The DGBAS said the CPI growth is expected to moderate to 1.72 percent in 2023 with raw material prices forecast to stabilize.
Chu Tzer-ming (???), head of the DGBAS, said despite the slight downgrade in the 2022 GDP growth forecast to 3.76 percent, Taiwan's economy remained stable, and taking into consideration the 2023 forecast of 3.05 percent, was still resilient.
Source: Focus Taiwan News Channel