Taipei, Aug. 17 (CNA) Taiwan has cut its growth forecast for its gross domestic product (GDP) in 2012 to 1.66 percent, from a previous estimate of 2.08 percent, amid a weakening global economy.
Taiwan's year-on-year economic growth in the second quarter was negative 0.18 percent, below an earlier estimate of negative 0.16 percent, the Directorate General of Budget, Accounting and Statistics (DGBAS) said Friday.
The agency forecast a 1.93 percent rise in the consumer price index for 2012, revising its projection of a 1.9 percent increase made in late July.
DGBAS head Shih Su-mei said that the world's weak economic fundamentals have dragged down global demand, citing a forecast downgrade in August by market research firm Global Insight which showed the global economic growth for 2012 will grow 2.6 percent, 0.1 percentage points lower from its July estimate.
In addition, the local high-tech sector, which serves as the major driving force of Taiwan's economic growth, has been faced with strong competition not only from international brands but also from Chinese exporters, the agency said.
Due to a low base period in 2011, the agency forecast Taiwan's economic growth for the third and fourth quarter can reach 1.99 percent and 4.23 percent year-on-year, respectively.
Taiwan's exports and imports for 2012 in U.S. dollar terms are both expected to fall from 2011, by 1.72 percent and 1.5 percent, respectively, the DGBAS said.
In the past three months, Taiwan has been feeling the pinch from the impact of falling global demand to record a contraction in GDP, marking the first decline since the third quarter of 2009, when the economy shrank 1.41 percent.
Gau Jr-shiang, a DGBAS section chief, said exports for the second quarter were US$4.34 billion lower than a year ago, and amid falling global demand, his agency has cut the 2012 exports forecast by US$5.6 billion to about US$302.9 billion.
As exports of goods and commercial services account for 70 percent of Taiwan's economic growth, "the influence (of falling exports) would be tremendous," said Gau.
However, the agency forecast Taiwan's economic growth for 2013 can reach 3.67 percent, with a 1.08 percent rise in the consumer price index.
Taiwan's per capita gross national product for 2012 is expected to stand at US$20,799, compared with US$20,690 recorded in 2011, according to the agency.
Meanwhile, Cathay Financial Holding Co., the nation's largest financial services provider, said the range of the GDP downgrade was "worse than expected."
As many economic indices have shown some bad results since late June, it may drag down Taiwan's economic dynamics in the second half of the year, said Achilles Chen, an assistant manager at Cathay Financial.
(By James Lee)