Taipei-The Taiwan Institute of Economic Research (TIER), one of Taiwan's leading economic think tanks, has cut its forecast for the country's gross domestic product (GDP) growth for 2019, citing weakening global demand.
Ongoing trade tensions between the United States and China has had a negative impact on global trade and in turn affected Taiwan's economy, which depends heavily on exports, the think tank said.
It estimated that Taiwan's GDP will grow 2.12 percent this year, down 0.08 percentage points from an earlier TIER projection made in November 2018.
The revised forecast was more downbeat than the most recent estimate by Taiwan's government, which has also warned of weakening exports amid the Washington-Beijing trade dispute.
At the end of November, the Directorate General of Budget, Accounting and Statistics lowered its forecast for Taiwan's 2019 GDP growth by 0.14 percentage points to 2.41 percent.
The TIER said the global economy has reached a peak, with major economies showing signs of a slowdown, weakness in the global oil market sending raw material prices lower, and a saturated communications device market limiting sales growth.
Gordon Sun (???), director of TIER's Economic Forecasting Center, said Friday, however, that biggest issue is still the uncertainty over whether and when the U.S. and China will resolve their trade dispute, which has undermined the confidence of enterprises at home and abroad.
Sun said the trade environment has been worse than expected, prompting the think tank to cut its estimates for Taiwan's exports for 2019.
The TIER said Taiwan's total merchandise and services exports are expected to grow 2.70 percent this year, compared with an earlier forecast of a 3.55 percent increase, while imports are forecast to grow 3.21 percent in 2019, down from an earlier estimate of a 3.98 percent increase.
As for domestic demand, efforts made by the government to encourage investment and stimulate private consumption are expected to help the local economy offset the effects of weakening global demand, Sun said.
According to the TIER, Taiwan's private consumption is expected to grow 2.20 percent in 2019, unchanged from the previous forecast, while private investment growth is projected at 3.18 percent, up from an earlier forecast of a 3.12 percent increase.
The think tank said capital formation for 2019 is expected to grow 4.60 percent in 2019, compared with an earlier prediction of a 4.40 percent increase.
Beyond the U.S.-China trade skirmish, the think tank also warned of other uncertainties faced by the global and local economy, including geopolitical conditions and monetary policy adjustments by major central banks around the world.
Source: Focus Taiwan News Channel