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ITRI cuts 2019 growth forecast for local manufacturing sector's output

2019/01/22 16:31:43

Taipei, Jan. 22 (CNA) The Industrial Technology Research Institute (IRTI) on Tuesday lowered its 2019 growth forecast for the local manufacturing sector's production value to 1.58 percent, citing downside risks in exports amid a slowdown of the global economy.

In its IEK Current Quarterly Model (IEKCQM) report, the government-sponsored institute cut its growth forecast for Taiwan's manufacturing sector's output in 2019 by 1.63 percentage points from its estimate in October 2018.

It estimated the production value of the sector at NT$19.56 trillion (US$635 billion) this year, lowering its forecast from NT$20.07 trillion.

In the report, ITRI's research team said the trade tensions between the United States and China, the two biggest economies in the world, have adversely affected the global economy and reduced demand.

The squeeze is also being felt in Taiwan's export-oriented economy, where many manufacturers heavily depend on outbound sales, according to the report.

On Monday, the Ministry of Economic Affairs (MOEA) forecast an 11.8-14.1 percent drop in Taiwan's export orders for January from a year earlier, after exports suffered a 10.5 percent year-on-year decline in December.

Last week, Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, projected a 1-3 percent annual growth in its 2019 sales, dropping its earlier forecast from 5-10 percent.

According to the ITRI, a global economic slowdown has led to a drop in raw material prices, which will adversely affect growth in the local manufacturing sector.

On Monday, the International Monetary Fund lowered its growth forecast for the global economy to 3.5 percent in 2019 and 3.6 percent in 2020, a downgrade of 0.2 and 0.1 percentage points, respectively, from its October estimate.

Given such unfavorable external factors, the ITRI said, production value growth is likely to shrink in the local manufacturing sector unless the circumstances change.

With Washington and Beijing in negotiations to resolve their trade disputes, confidence in the global economy may recover if they reach an agreement but in the meantime, the investment plans of many enterprises in the Asia Pacific region have been disrupted, the ITRI said.

It forecast a 1.15 percent annual increase in the production value of Taiwan's metal/electrical industry to NT$5.51 trillion in 2019, and a 2.20 percent growth in the output of the information and electronics industry to NT$6.67 trillion.

The production value of the chemical industry is expected to hit NT$5.02 trillion in 2019, an increase of 1.1 percent from a year earlier, the ITRI said.

(By Pan Tzu-yu and Frances Huang)