Taipei, Aug. 18 (CNA) Citibank has lowered its forecast for Taiwan's gross domestic product (GDP) growth for 2012 to 1.9 percent from a previous estimate of 2.4 percent.
Cheng Cheng-mount, chief economist at Citibank Taiwan, said Friday that the downgrade reflects a fall in Taiwan's exports, which serve as the major driving force behind the country's economic growth.
Cheng said the downward revision was made soon after Taiwan last week reported a year-on-year contraction in July exports.
In July, Taiwan's exports fell 11.6 percent from the same month of last year to US$24.8 billion, marking the fifth consecutive month that a year-on-year drop was recorded.
The Citibank economist said the 11.6 percent fall was much steeper than the average monthly fall for the second quarter, prompting the bank to cut its forecast.
According to the Directorate General of Budget, Accounting and Statistics (DGBAS), Taiwan's exports for the second quarter fell 5.41 percent in U.S. dollar terms, compared with a 4 percent fall recorded in the first quarter.
However, the Citibank forecast is still higher than the government's estimate of a 1.66 percent increase.
That same day, the DGBAS downgraded its GDP forecast for 2012 from the previous estimate of 2.08 percent, citing weakening global demand as a concern.
The DGBAS said the economy in the second quarter shrank by 0.18 percent from a year earlier after an increase of 0.40 percent recorded in the first quarter. In the first half of this year, the agency said, the GDP grew 0.10 percent year-on-year.
Citibank has also lowered its forecast of Taiwan's GDP growth for 2013 to 3.6 percent from an earlier estimate of 4.2 percent.
Other foreign banks in Taiwan are expected to soon follow suit by cutting their 2012 GDP growth predictions.
The latest figures from DBS Bank of Singapore, Australia and New Zealand Banking Group Ltd. and Standard Chartered Bank stood at 2 percent, 3.1 percent and 2.7 percent, respectively.
(By Kao Chao-fen and Frances Huang)