Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) yesterday forecast that the economy would grow 3.3 percent next year, following an expansion of 1.8 percent this year.
The projection was conservative compared with the government’s estimate and those predicted by other forecasters, as Standard Chartered is concerned about delayed COVID-19 vaccine distribution and slow private investment, it said.
The nation’s economy is likely to be affected by the slow recovery of the global economy next year, which would affect local tourism and exports of non-technology products, the bank added.
Photo: Lee Ching-hui, Taipei Times
The Directorate-General of Budget, Accounting and Statistics (DGBAS) last month forecast Taiwan’s GDP would rise 3.83 percent next year, while DBS Bank Ltd issued a 4.2 percent expansion forecast.
Meanwhile, most research agencies expect the vaccine distribution to begin worldwide in the second quarter next year and accelerate economic recovery.
However, Standard Chartered is skeptical about quick vaccine deliveries due to production challenges, and allocation and logistics issues, Tony Phoo (符銘財), a Taipei-based economist at the bank, told a news conference in Taipei.
“It remains uncertain how many COVID-19 vaccine doses can be produced next year,” Phoo said. “We assume that 1 billion doses would be produced annually, and it would take at least seven years to reach a high global immunization coverage.”
Assuming that herd immunity would be reached when at least 30 percent of the global population are vaccinated, it would still take a while to see the effect, Phoo said.
“We are facing a demand issue, not supply issues. Only when people feel safe and resume their consumption, the global economy will return to the pre-pandemic level,” he said.
The bank forecast that the nation’s private investment, mostly in the technology sector, would likely slow down next year, Phoo said, citing that imports of semiconductor equipment, a leading indicator of investment in the technology sector, declined 17 percent annually last month.
The prediction came in contrast to the DGBAS’ forecast that private investment would increase by a healthy 3.19 percent next year.
Besides the slowing imports of equipment, the high comparison base would also make it difficult for private investment to stage a strong rally next year, Phoo said.
The bank expects Taiwan’s private consumption to rebound next year, particularly in the second quarter, as the labor market would remain stable, he said.
The central bank would leave the benchmark interest rates unchanged next year, Phoo said, as global economic growth would remain weak and Taiwan’s headline inflation would rise modestly, at less than 1 percent.
The US-China trade tensions would be another potential risk for Taiwan’s economy, Phoo said.
The tensions are not expected to improve or deteriorate anytime soon, he added.
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