ADB cuts Taiwan 2020 GDP growth forecast to 0.8% amid COVID-19

Manila, June 18 (CNA) Following the Asian Development Bank (ADB) cutting its forecast for gross domestic product (GDP) growth in the region for 2020, the bank said Thursday it has lowered its forecast for GDP growth in Taiwan from an earlier estimate of 1.8 percent to 0.8 percent.

The downgrade represented a more downbeat assessment of Taiwan's economic situation in the wake of the COVID-19 pandemic than that of Taiwan's government, which forecast in late May economic growth of 1.67 percent in 2020.

According to the ADB's forecast, Taiwan is expected to perform better than neighboring countries and territories in 2020.

For example, it estimated that Hong Kong's economy will contract by 6.5 percent, a deterioration from an earlier forecast of minus 3.3 percent, Singapore's economy could fall by 6 percent, a downgrade from 0.2 percent growth, and South Korea's is also expected to shrink by 1 percent, a cut from 1.3 percent growth.

In a supplement to its Asian Development Outlook (ADO) 2020 published in April, the ADB said Taiwan remains relatively resilient compared with its peers in Asia, although its GDP rose only 1.5 percent in the first quarter, the slowest growth since the first quarter of 2016, in the wake of COVID-19.

The ADB's lower growth forecast for Taiwan reflects expectations that "private consumption will remain weak in the second quarter before recovering slightly in the second half of the year."

The ADB said Taiwan's economic momentum is expected to pick up in 2021 with growth expected to hit 3.5 percent on the back of accommodative monetary policy and fiscal stimulus worth US$35 billion, which is equal to 5.6 percent of GDP.

The 3.5 percent growth forecast represents an upgrade from an earlier estimate of 2.5 percent, the ADB report showed.

In addition to Taiwan, China is the only other economy in East Asia forecast to grow in 2020, although the ADB has also cut its forecast for China's economic growth from an earlier estimate of 2.3 percent to 1.8 percent, the ADB report indicated.

According to the ADB, China's economy is expected to rebound and grow 7.4 percent in 2021, while Hong Kong, Singapore and South Korea are expected to see their economies grow 5.1 percent, 3.2 percent and 3.5 percent, respectively.

The ADB report showed the economy of its developing members as a whole will grow 0.1 percent in 2020, a downgrade from an earlier forecast of 2.2 percent, while growth in 2021 is expected to hit 6.2 percent, unchanged from the previous forecast.