Taiwan’s real GDP is expected to fall 1.9 percent quarter-on-quarter this quarter due to weak consumption, which would be the first quarterly GDP decrease since a dip of 0.81 percent in the second quarter of last year, Cathay Financial Holding Co (國泰金控) said yesterday.
As COVID-19 infections have risen since the middle of last month and a nationwide level 3 alert has brought strict virus control measures, private consumption lost steam, especially big-ticket spending, said Hsu Chih-chiang (徐之強), a professor of economics at National Central University who heads a research team commissioned by Cathay Financial.
Even a slight dip in private consumption would take a toll on the local economy, as it is an important pillar, Hsu said.
Photo: Allen Wu, Taipei Times
Nominal private consumption was about NT$9.6 trillion (US$342.78 billion) last year, accounting for 48 percent of the nation’s GDP of NT$19.76 trillion, Directorate-General of Budget, Accounting and Statistics (DGBAS) data showed.
“The pandemic has cast a shadow over private consumption for half of the second quarter, but exports, which hit a record at US$37.4 billion last month, have cushioned the impact, or the quarterly decrease might be more severe,” Hsu said.
Consumption could regain momentum in September at the earliest if the outbreak is contained, in which case real GDP growth would return to positive territory with a quarterly rise of 0.8 percent, he said.
“We assumed that the level 3 alert would end on June 28 when we ran the prediction model, but the government today announced an extension to July 12, so consumption recovery might be delayed further,” Hsu said, adding that consumption would not immediately rebound as people would initially be conservative.
Moreover, consumption will not fully recover if vaccination rates are low, but it is difficult to forecast when the vaccination rate in Taiwan would reach 60 percent, an estimated threshold for herd immunity, he said.
Due to the disruption in the second quarter and part of the third quarter, Cathay Financial revised downward its forecast for the annual increase of private consumption to 2.39 percent for the whole of this year from 3.63 percent projected in March, he said.
On a year-on-year basis, real GDP growth is predicted to rise 5 percent, compared with an annual rise of 8.92 percent in the first quarter, Hsu said.
Annual GDP growth is estimated to be 7 percent for the first half of this year, but it would slow to 3 percent in the second half in light of a high comparison base and virus disruptions, he said.
Cathay Financial revised upward its forecast for GDP growth for the whole year to 5 percent from 4.2 percent projected in March on the back of stronger-than-expected exports, Hsu said, adding that this year’s real GDP growth might reach 6 percent if there is no virus surge.
Overall, it is likely that real GDP growth would be higher than last year’s 3.12 percent, he said.
NATIONAL SECURITY: The Chinese influencer shared multiple videos on social media in which she claimed Taiwan is a part of China and supported its annexation Freedom of speech does not allow comments by Chinese residents in Taiwan that compromise national security or social stability, the nation’s top officials said yesterday, after the National Immigration Agency (NIA) revoked the residency permit of a Chinese influencer who published videos advocating China annexing Taiwan by force. Taiwan welcomes all foreigners to settle here and make families so long as they “love the land and people of Taiwan,” Premier Cho Jung-tai (卓榮泰) told lawmakers during a plenary session at the Legislative Yuan in Taipei. The public power of the government must be asserted when necessary and the Ministry of
Proposed amendments would forbid the use of all personal electronic devices during school hours in high schools and below, starting from the next school year in August, the Ministry of Education said on Monday. The Regulations on the Use of Mobile Devices at Educational Facilities up to High Schools (高級中等以下學校校園行動載具使用原則) state that mobile devices — defined as mobile phones, laptops, tablets, smartwatches or other wearables — should be turned off at school. The changes would stipulate that use of such devices during class is forbidden, and the devices should be handed to a teacher or the school for safekeeping. The amendments also say
EMBRACING TAIWAN: US lawmakers have introduced an act aiming to replace the use of ‘Chinese Taipei’ with ‘Taiwan’ across all Washington’s federal agencies A group of US House of Representatives lawmakers has introduced legislation to replace the term “Chinese Taipei” with “Taiwan” across all federal agencies. US Representative Byron Donalds announced the introduction of the “America supports Taiwan act,” which would mandate federal agencies adopt “Taiwan” in place of “Chinese Taipei,” a news release on his page on the US House of Representatives’ Web site said. US representatives Mike Collins, Barry Moore and Tom Tiffany are cosponsors of the legislation, US political newspaper The Hill reported yesterday. “The legislation is a push to normalize the position of Taiwan as an autonomous country, although the official US
CHANGE OF TONE: G7 foreign ministers dropped past reassurances that there is no change in the position of the G7 members on Taiwan, including ‘one China’ policies G7 foreign ministers on Friday took a tough stance on China, stepping up their language on Taiwan and omitting some conciliatory references from past statements, including to “one China” policies. A statement by ministers meeting in Canada mirrored last month’s Japan-US statement in condemning “coercion” toward Taiwan. Compared with a G7 foreign ministers’ statement in November last year, the statement added members’ concerns over China’s nuclear buildup, although it omitted references to their concerns about Beijing’s human rights abuses in Xinjiang, Tibet and Hong Kong. Also missing were references stressing the desire for “constructive and stable relations with China” and
RSS