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Think tank cuts forecast for Taiwan's 2019 GDP growth

2019/06/15 15:56:02

Taipei, June 15 (CNA) The Taiwan Research Institute, a leading economic think tank, has lowered its forecast for Taiwan's gross domestic product (GDP) growth in 2019 to 2.08 percent, citing uncertainty from the trade standoff between the United States and China.

The institute said the trade dispute escalated in May as the two sides increased tariffs on each other's goods, dashing hopes that the world economy will pick up in the second half of the year and leading to greater anxiety over future growth.

As a result, the think tank on Friday cut its forecast for 2019 GDP growth by 0.26 percentage points from its December 2018 estimate to 2.08 percent.

The institute was more downbeat than the government statistics office. The Directorate General of Budget, Accounting and Statistics cut its forecast of 2019 GDP growth to 2.19 percent in May from 2.27 percent in February.

Institute founder Liu Tai-ying (劉泰英) said in a news conference that uncertainty has been on the rise as the global trade war has escalated and is a key factor holding back positive economic momentum.

Liu projected that the trade war could last four to five years, meaning that the global economy is likely to continue to feel the pinch resulting from such uncertainty.

The institute predicted 2.32 percent growth in Taiwan's exports of goods and services in 2019, down from a previous estimate of 2.77 percent, because of weakening global demand in the second half of the year.

Taiwan's imports of goods and services are now expected to grow 2.06 percent in 2019, down from an earlier forecast of 2.51 percent, the institute said.

Economic uncertainty has also affected local consumption, in particular in durable goods, which led the institute to lower its forecast for Taiwan's private consumption to 1.98 percent from 2.20 percent previously, according to the institute.

If there is some good news in an otherwise challenging environment it would be domestic investment, which the institute said is expected to pick up as global supply chains adjust to the U.S.-China trade dispute and some Taiwanese businesses in China return home.

The institute said private investment is expected to grow 4.19 percent in 2019, revised upwards from an earlier estimate of 3.75 percent.

Helped by the government's efforts to push infrastructure development, the institute said, capital formation for 2019 is expected to grow 5.09 percent, compared with an earlier forecast of 5.00 percent.

(By Liu Li-jung and Frances Huang)