Taiwan’s economy would grow 3.6 percent this year and 2.5 to 3 percent next year, Standard Chartered Bank Taiwan (渣打台灣) forecast yesterday, saying there are no signs of recession.
The slower GDP growth next year would be due to weakening demand in the US and Europe, even though exports to China would improve from this year, Standard Chartered chief economist Tony Phoo (符銘財) told a news conference.
The US economy is predicted to grow 0.3 percent next year, compared with 2.1 percent this year, and the European economy is forecast to grow 0.4 percent next year, compared with 2.3 percent this year, Phoo said.
Photo: CNA
Taiwan should continue to relax border controls to attract foreign tourists and boost domestic consumption, Phoo said, citing Thailand’s strong GDP growth on recovering tourism.
Despite the emergence of new variants of SARS-CoV-2, Taiwan has reached a high COVID-19 vaccination rate and can continue to ease its social distancing measures to boost private consumption, he added.
“Strong private consumption should help cushion the damage posed by weaker exports next year. Therefore, we see no signs of recession ahead,” Phoo said.
The central bank is expected to stop raising its policy rates next year after inflation abates, he said.
The bank said slowing exports to China could be a drag on the local economy in the second half of the year, as Chinese consumer demand remains weak amid Beijing’s “zero COVID-19” policy and lockdown measures.
“There is a slim chance that China would abandon its zero COVID-19 policy by the end of this year, as many rural areas support this policy,” Becky Liu (劉潔), a Hong-Kong based strategist at Standard Chartered, told the event via videoconference.
Since February, almost all first-tier cities have seen the virus spread continuously, and almost every day there is a small community facing new lockdown measures, Liu added.
The lockdown measures caused China’s import growth to slow in the first half of this year from a year earlier, she said, adding that the situation is unlikely to improve greatly in the second half.
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