The Directorate-General of Budget, Accounting and Statistics might next month cut its forecast of GDP growth for this year again, from the 1.6 percent it projected in August, as major economic data have been weaker than expected, DGBAS Minister Chu Tzer-ming (朱澤民) said yesterday.
Chu shared the conservative outlook at a meeting of the Legislative Yuan’s Finance Committee, where he said the DGBAS review committee would update its growth projection next month.
A downward revision is likely, given that major bellwethers were below par, he said.
Photo: Tu Chien-jung, Taipei Times
Export orders, industrial production, private investment and other GDP components remain in negative territory, although exports grew slightly last month, government data showed.
“The growth forecast of 1.6 percent was made in August... Research institutes at home and abroad have recently projected growth of 1 to 1.5 percent,” Chu said during a question-and-answer session.
Full-year showings look a bit softer than previously expected, but revisions would have to wait until all figures are in, he said.
However, Chu said he disagreed with the IMF changing Taiwan’s GDP growth forecast to 0.8 percent for this year.
“The final numbers will prove higher than 0.8 percent, in the absence of major external shock,” he said.
If the Israel-Hamas war escalates and involves oil exporting countries, which would drive up international oil prices, GDP growth of 1 percent is overly optimistic for Taiwan, as it imports more than 90 percent of its oil, Chu said.
The minister avoided speculating about the consumer price index (CPI), except to say the inflationary gauge is unlikely to drop to 1 percent in the near future after rising above 2 percent for three straight years.
Central bank Governor Yang Chin-long (楊金龍) recently said that the CPI would hover around 2 percent for a while, restricting room for monetary easing to support the economy.
Chu said he agreed that the government is responsible for the inequitable distribution of social wealth and resources, and it could narrow the gap between rich and poor.
The government could achieve this by adjusting income taxes, expanding social welfare spending and increasing wages, the minister said.
Increasing social welfare spending appears to be the most effective measure, because raising income taxes would scare away foreign investors, Chu said.
The government set aside NT$713 billion (US$21.99 billion) for social welfare this year, up 55 percent from NT$460 billion in 2016, Chu said.
The Ministry of Finance said that Taiwan’s wealth distribution is relatively fair, with 3.05 million wage earners, or 47 percent, spared from paying personal income tax.
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