The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday cut its forecast for Taiwan’s GDP growth this year from 2.35 percent to 1.66 percent on the grounds that financial results disappointed in the first half of the year and downside risks loom large.
“Though retailers and hospitality operators fared well, they cannot offset declines in exports, industrial output and private investment,” TIER president Chang Chien-yi (張建一) said.
Exports, which make up about 60 percent of GDP, would contract 8.9 percent this year and continue to shrink this quarter, the Taipei-based think tank said.
Photo: CNA
Inventory gluts appeared to be taking longer to digest due to poor end-market demand for tech gadgets, Chang said.
Imports would shrink 11.14 percent annually, giving Taiwan a trade surplus, TIER Economic Forecasting Center director Gordon Sun (孫明德) told a news conference.
Foreign trade is expected to come out of the woods in the fourth quarter of the year when exports would expand 7.25 percent annually and imports would grow 4.45 percent, the institute said.
Private consumption is expected to help bolster the economy this year with a 6.22 percent annual increase, it said.
The government would lend support by spending 2.32 percent more than it did last year, it added.
Against this backdrop, business confidence among local manufacturers last month dropped 1.16 points to 87.96, weakening for a third straight month, but the pace of decline was not significant, the institute said, citing a separate report.
The number of firms with a pessimistic outlook regarding the coming six months grew 3.9 percentage points to 29.3 percent, while those with a rosy outlook dropped 6.7 percentage points to 21.5 percent, it said.
Mineral product makers were upbeat, but chemical, plastic and oil product suppliers remained conservative, TIER said, adding that the remaining sectors expressed neutral views.
By contrast, the sentiment measure for local service providers picked up 0.17 points to 99.19, rising for the second month in a row, it said, adding that while improved business continued to be reported by restaurants and hotels, securities houses also reported an uptick thanks to recent rallies on the local bourse.
The confidence reading for the construction and property sectors gained 2.3 points to 95.77 after government agencies sped up construction on public works projects, although private development projected stalled, it said.
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