The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday trimmed its forecast for Taiwan’s GDP growth this year from 3.94 percent to 3.9 percent, saying it had previously overestimated the strength of exports.
The downward revision came after economic growth, which increased 6.63 percent in the first quarter, moderated to 5.06 percent in the second quarter.
“Despite the tweak, Taiwan’s economy remains on a course of stable growth that will extend into next year,” DGBAS Minister Chen Shu-tzu (陳淑姿) told a news conference in Taipei.
Photo: CNA
While demand for technology products remained strong on the back of the artificial intelligence boom, shipments of non-tech products weakened, resulting in an imbalanced recovery, Statistics Department head Tsai Yu-tai (蔡鈺泰) said.
Exports, the main component of the nation’s economy, are projected to expand 8.71 percent this year, down from the 10.06 percent the statistics agency predicted in May, after second-quarter results missed the target by 4.54 percentage points, the agency’s report showed.
China-bound exports in particular have taken a hit from China’s economic slowdown and the global electronics supply chain realignment, government data showed.
Manufacturers of plastic, chemical and petrochemical products were dealt an extra blow by cross-strait tensions and the termination of favorable trade terms.
Consequently, exports are forecast to increase 6.27 percent this quarter and 6.53 percent next quarter, down from the agency’s previous estimates of 7.02 percent and 6.73 percent respectively, Tsai said.
Suppliers of electronics used in AI development and applications posted robust earnings and are looking at continued improvement.
Taiwan Semiconductor Manufacturing Co (台積電) on Thursday said that it has signed an agreement with Innolux Corp (群創) to buy the display maker’s plant in Tainan for NT$17.14 billion (US$530.85 million) amid tight supply of its advanced packaging capacity.
That suggests private investment, another GDP component, would stage a faster rebound of 3.89 percent, up from 1.52 percent previously, which should help offset disappointing external demand, the DGBAS said.
At the same time, consumer spending would remain resilient, growing 2.78 percent this year, little changed from the previous forecast of 2.77 percent, it said.
Consumer prices are forecast to grow from 2.07 percent to 2.17 percent this year, as a spate of bad weather pushed up vegetable and fruit prices, it said.
The inflationary gauge is expected to return to the central bank’s 2 percent target next year at 1.91 percent, it said.
The DGBAS also reported that the nation’s median income last year climbed to NT$349,000. This raised the annual tax deduction for basic living expenses by NT$7,000 to NT$209,000, or an extra tax deduction of NT$28,000 from personal income taxes.
People may claim the benefit when they file income taxes in May next year for this year’s earnings.
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