The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday raised its forecast for GDP growth this year to 3.94 percent from 3.43 percent, citing exports’ faster-than-expected recovery on the back of strong demand for electronics used in artificial intelligence (AI) applications.
The upward revision came after GDP last quarter increased by 6.56 percent from a year earlier — an 11-quarter high — beating last month’s prediction by 0.05 percentage points, DGBAS Minister Chen Shu-tzu (陳淑姿) said, adding that the economy expanded by a mild 1.08 percent last quarter in terms of the seasonally adjusted annual rate.
“Rapid growth in demand for AI, high-performance computing and other emerging technologies turned the global technology product cycle and benefitted local firms in the supply chain,” Chen told a media briefing in Taipei.
Photo: CNA
External demand contributed 5.49 percentage points to the GDP reading in the January-to-March period, during which exports increased 12.89 percent and imports gained 2.94 percent, the agency said.
Shipments of electronics and information and communications technology products soared 25.1 percent from a year earlier to US$95.1 billion in the first four months of this year, it said.
Together, the two product categories made up 64.4 percent of overall exports, up from 44.1 percent in 2016, it said.
The upward trend is likely to continue and lift outbound shipments by 10.06 percent this year, it said, adding that in February it predicted a 6.14-percent rise.
Major economies and technology titans are spending on AI infrastructure and applications, Statistics Department head Tsai Yu-tai (蔡鈺泰) said.
At the same time, private consumption remains healthy, with a 2.77-percent increase predicted for this year on top of a remarkable performance last year, Tsai said.
The DGBAS expects a mild pickup of 1.52 percent for private investment, as local semiconductor firms seek to maintain their technology leadership and expand capacity, but largely stand by a cautious spending strategy, he said.
For the first time, the agency listed AI development as both an opportunity and an uncertainty, with demand looking insatiable and having the potential to prompt further GDP revisions, he said.
However, AI development could hit a snag and turn unexpectedly, which is not uncommon in technology product cycles, Tsai said.
The consumer price index is projected to rise by 2.07 percent this year, faster than the agency’s February forecast by 0.22 percentage points and above the central bank’s 2 percent target for the third straight year, the DGBAS said.
Inflationary pressure is subsiding, but slowly, as service charges are sticky in nature, Chen said.
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