The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday raised its forecast for GDP growth this year by 0.08 percentage points to 3.43 percent, as the economy emerges from a slowdown that weighed on last year’s listless 1.31 percent result.
The agency attributed the upward revision mainly to the anemic comparison base and as companies remain cautious about capital spending amid lingering inflationary pressure and geopolitical tensions.
“The poor performance last year paradoxically provided room for upward adjustments,” DGBAS Minister Chu Tzer-ming (朱澤民) said.
Photo: CNA
Exports, which account for 60 percent of GDP, are forecast to expand 6.14 percent to US$459 billion this year, the second-highest in history, on the back of robust demand for artificial intelligence, high-performance computing, automotive and upcoming technology applications, Chu said.
The forecast marks a reduction of 1.2 percentage points from the estimate it made in November last year, Chu said.
Imports would advance at an annual rate of 6.24 percent this year, also weaker by 2.4 percentage points than the previous estimate, the agency said in a report.
Expected economic slowdowns in mature economies and China warrant the cautious predictions, Chu said, adding that geopolitical conflicts persist in different parts of the world.
The backdrop would drive firms to maintain a modest approach in planning capital expenditure, accounting for a conservative growth outlook in private investment growth this year at 1.45 percent, down 1.72 percentage points from the agency’s estimate three months earlier, the DGBAS said.
Similarly, investments by the public sector would only increase 2.72 percent year-on-year, 1.83 percentage points softer than its November prediction, the agency said.
By contrast, the DGBAS expects a 1.85 percent annual rise in the consumer price index (CPI) this year, 0.21 percentage points higher than previously expected, as accommodation prices remain on an upward trend and service charges are unlikely to decline, it said.
The forecast has not yet factored in forthcoming electricity rate hikes and how sectors would respond to them, Chu said.
“If businesses pass cost hikes onto consumers, the CPI climb would be steeper,” he said. “Inflationary pressures would stick around, despite a moderating trajectory.”
Carbon taxes to be introduced next year represent another uncertainty, as enterprises could take responsive steps this year, Chu said.
Fortunately, private consumption would expand 2.64 percent this year, lending solid support to economic growth regardless of last year’s fast increase of 8.32 percent, the DGBAS said.
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