TAIPEI – Taiwan’s economy is likely to grow at a slower pace this year than originally forecast, the statistics bureau said on Friday, lowering its outlook due to slowing global inflation and slowing consumer demand in key markets.
With a downward revision, the Bureau of Statistics lowered its export forecast for this year and offered a lower forecast for next year, although it said semiconductor demand would still help boost the economy.
“By 2023, export momentum is expected to continue, driven by the domestic semiconductor industry’s key process advantage and increased production capacity, but global demand is cooling off,” it said.
Gross domestic product (GDP) for 2022 is now expected to be 3.76 percent higher than a year earlier, the Directorate-General for Budget, Accounts and Statistics said, revising the 3.91 percent forecast released in May.
The outlook is much slower than the 6.45 percent log of 2021, which was the fastest rate since the economy grew 10.25 percent in 2010.
Woods Chen, head of macroeconomics at Yunta Securities Investment Consulting in Taipei, said full-year GDP could see another contraction.
“There are still many potential uncertainties in the external environment, such as the potential for energy problems in Europe,” he said.
For 2022, the statistics office now sees an increase in exports of 13.51 percent compared to the previous year, compared to the previous forecast of 14.62 percent.
In its first estimate for next year, it said GDP grew 3.05 percent in 2023 while exports grew just 2.64 percent.
The directorate said tightening monetary policy and war-related inflation in Ukraine are weighing on consumers, although demand for semiconductors, the main focus of Taiwan’s economy, remained strong.
It also pointed to China’s lockdown measures to curb the spread of COVID-19 as a crisis in economic activity.
Taiwan’s exports account for a large part of demand from global tech giants like Apple Inc. as the island is a major producer of semiconductors, whose global shortages have plagued companies such as automakers and boosted Taiwan’s corporate profits. – Reuters