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Taiwan cuts 2019 GDP growth forecast to 2.19%

2019/05/24 21:32:48

Taipei, May 24 (CNA) The Directorate General of Budget, Accounting and Statistics (DGBAS) said Friday that it has cut its forecast for Taiwan's gross domestic product (GDP) growth for 2019 to 2.19 percent at a time of a weakening global economy.

As uncertainty over the world's economy has been on the rise amid escalating trade tension between the United States and China, the DGBAS has downgraded Taiwan's GDP growth forecast by 0.08 percentage points from an earlier estimate made in February.

In addition to the unfavorable external factors, the DGBAS also cited falling private consumption, as consumer confidence has been hurt by global financial market volatility amid the ongoing trade dispute.

As a result, the DGBAS has lowered its forecast for Taiwan's real private consumption growth forecast after inflationary adjustment by 0.16 percentage points to 2.02 percent.

Meanwhile, the DGBAS said it has raised its forecast for Taiwan's real growth in exports of merchandise and services for 2019 by 0.37 percentage points to 2.62 percent.

The DGBAS said it had appeared more cautious in the past, but as returning Taiwanese companies from overseas have been exporting more goods from Taiwan to offset the impact of the Washington-Beijing trade dispute, it made the upgrade.

However, exports in merchandise only are expected to fall 1.17 percent from a year earlier in 2019 after inflationary adjustment, marking the first year-on-year decline in three years, the DGBAS said.

The DGBAS said it has raised its forecast for Taiwan's real imports of merchandise and services by 0.34 percentage points from an earlier estimate to 2.23 percent for 2019, adding that real merchandise import growth is expected to stand at 0.02 percent

As local semiconductor firms continue to pour funds into high-end technologies and wind and solar power developers are keen to invest, the DGBAS said, domestic investment will grow accordingly in 2019.

Therefore, the DGBAS said, it has raised its forecast for Taiwan's real capital formation growth for this year by 0.39 percentage points from an earlier estimate, to 5.39 percent.

In addition, the DGBAS has also upgraded Taiwan's real private investment growth for 2019 by 0.86 percentage points to 4.48 percent, a six-year high.

DGBAS chief Chu Tzer-ming, (朱澤民) said that despite a move to cut Taiwan's GDP growth forecast, the local economy remained stable, and he added that he expects the economic fundamentals to improve as more and more Taiwanese companies operating overseas have pledged to invest in Taiwan in a bid to offset the impact of the Washington-Beijing trade issue.

So far this year, a total of 61 Taiwanese companies have committed to returning to Taiwan, with combined investments hitting NT$310 billion under a government incentive program launched in January to encourage them to come home, according to the Ministry of Economic Affairs.

Chu said some of them are expected to pour in more money in the second half of this year, which will further facilitate local economic growth.

According to the DGBAS, Taiwan's GDP grew 1.71 percent in the first quarter, and is forecast to grow 1.78 percent, 2.39 percent and 2.80 percent, respectively, in the second, third and fourth quarters.

(By Pan Tzu-yu and Frances Huang)
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