The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday cut its forecast for GDP growth this year from 2.04 percent to 1.61 percent, as exports and private investment proved bigger drags amid a global economic slowdown.
The revision is necessary after the nation’s economy declined 3.31 percent in the first quarter and grew 1.36 percent in the second quarter, both worse than earlier data indicated.
“Interest rate hikes in advanced nations tethered global business activity and dampened end-market demand for technology products,” DGBAS Minister Chu Tzer-ming (朱澤民) told a news conference in Taipei.
Photo: CNA
China’s disappointing recovery also weighed, the official said.
Taiwan is home to the world’s largest contract manufacturers of electronics used in smartphones, notebook computers, wearables, TVs and automobiles, with China, the US and Europe accounting for 70 percent of outbound shipments.
People are assigning more importance to in-person experiences and are showing less interest in electronic gadgets, Chu said.
That backdrop explains why exports fell 16.97 percent last quarter, following a 19.19 percent tumble three months earlier, the statistics agency said.
The DGBAS is now forecasting a 9.51 percent drop in exports this year, deeper than the 7.27 percent retreat it predicted in May.
Imports, a major gauge of capital equipment and materials intended for exports, shrank 23.98 percent during the second quarter, as local firms cut capital spending and capacity to save costs and cope with poor business visibility, the agency said.
Capital formation slumped 14.37 percent last quarter, removing 3.95 percentage points from second-quarter GDP, it found.
Private investment is expected to fall 5.93 percent, down 3.44 percentage points from the previous forecast, it said.
Private consumption was the main growth driver. It rose 12.56 percent on the back of robust retail, restaurant, automobile and tourism sales, it said.
Taiwanese spending in foreign nations soared 8.9 times, but the money did not affect GDP calculations, it said.
Consumer spending is expected to increase 7.94 percent this year, 1.02 percentage points higher than the previous prediction, it said.
Consumer prices would advance 2.14 percent this year, 0.12 percentage points milder than a May estimate, as international energy and raw material prices continue to rise, it said.
Exports are likely to stay listless this quarter with a 5.45 percent retreat and stage a 4.94 percent increase in the fourth quarter, helped by booming interest in artificial intelligence (AI) applications, Chu said.
Scores of Taiwanese firms are part of global AI supply chains.
Things are set to improve next year with GDP growth of 3.32 percent forecast as the technology downturn comes to an end, Chu said.
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