Taiwan cuts 2020 GDP growth forecast to 1.56%

Taipei, Aug. 14 (CNA) Taiwan's official statistics bureau has lowered its forecast for the country's economic growth in 2020 to 1.56 percent after Taiwan registered negative growth in the second quarter.

The latest growth estimate by the Directorate General of Budget, Accounting and Statistics (DGBAS) on Friday was 0.11 percentage points lower than its forecast of 1.67 percent gross domestic product (GDP) growth made in May.

The DGBAS also gave its first forecast for Taiwan's GDP growth in 2021, and projected it at 3.92 percent on expectations the global economy will climb out of the doldrums resulting from COVID-19.

In the second quarter of 2020, the DGBAS said, the country's GDP contracted by 0.58 percent, less than the 0.73 percent drop expected in July, but far worse than the 0.50 percent growth predicted when the agency made its last full-year growth forecast.

COVID-19 has affected global demand this year, dragging down raw material prices and hurting old economy industries, and tourism income and service sector gains were also falling because of border controls imposed to contain the spread of the virus, the agency said.

But the local electronics sector has benefited from solid demand for emerging technologies such as 5G applications and high performance computing (HPC) devices as well as gadgets for online learning and remote work.

Taiwan's growth in merchandise and services exports is expected to fall 2.74 percent from a year earlier in 2020, a slight upgrade from the previous estimate of a 3.10 percent decline made in May, the DGBAS said.

The DGBAS said imports of merchandise and services for 2020 are expected to fall 4.43 percent, a downgrade from an earlier estimate of a 4.23 percent fall.

Private consumption is expected to fall 1.44 percent from a year earlier, worse than May's forecast of a 0.24 percent decline, the DGBAS said.

The COVID-19 scare left consumers more reluctant to go out and spend money for part of the second quarter, but the government's stimulus measures are expected to boost consumption the rest of this year.

Capital formation for 2020 is expected to grow 4.65 percent, up from the previous estimate of a 4.33 percent increase, because of ongoing investment by the private sector and the government, the DGBAS said.

Private investment for 2020 is expected to grow 2.41 percent, up from a previous estimate of a 2.31 percent rise, it said.

In the first half of this year, Taiwan's GDP grew 0.78 percent, the DGBAS said, and it pegged growth for the third and fourth quarters at 2.01 percent and 2.56 percent, respectively.

As for 2021, the DGBAS said exports and imports of merchandise and services are expected to grow 5.61 percent and 4.55 percent, respectively, while private consumption is expected to rise 3.55 percent.

It estimated first, second, third and fourth quarter growth in 2021 at 4.54 percent, 5.97 percent, 3.34 percent and 2.07 percent, respectively.

Due to a plunge in crude oil prices, Taiwan's consumer price index is expected to fall 0.19 percent in 2020, the DGBAS said.