Taiwan's GDP growth forecast raised to 5.46% for 2021 despite COVID-19

Taipei, June 4 (CNA) Despite struggling to contain an upsurge in domestically-transmitted COVID-19 cases, Taiwan will likely see its gross domestic product (GDP) grow by more than 5 percent in 2021, the Directorate General of Budget, Accounting and Statistics (DGBAS) said on Friday.

The DGBAS said the local economy is expected to benefit from rising global demand at a time when many other economies are showing signs of a rebound and a strong export performance will likely offset the impact from the pandemic, while robust domestic investments will also give support to the economic fundamentals.

According to the DGBAS, Taiwan's GDP is forecast to grow 5.46 percent, an upgrade of 0.82 percentage points from the 4.64 percent made in February.

If the forecast is accurate, Taiwan is expected to enjoy the highest growth since 2010, when the country's GDP grew 10.25 percent, the DGBAS' statistics showed.

It said the country's economy for the first quarter grew 8.92 percent, beating a preliminary reading of 8.16 percent in April and also topping the 6.20 percent forecast in February.

Taiwan's GDP is expected to grow 6.93 percent, 3.33 percent and 3.16 percent, respectively, in the second, third and fourth quarter of this year, the DGBAS said.

Tsai Yu-tai (蔡鈺泰), head of the DGBAS' Department of Statistics, said the latest GDP growth forecast was updated on an assumption that the local COVID-19 infections can be contained by the end of the third quarter.

Tsai said Taiwan's economy is expected to obtain significant support from its strong exports on the back of recovering global demand in 2021, while emerging technologies such as 5G applications is expected to give an additional boost to outbound sales this year.

As a result, the DGBAS said, Taiwan's exports of merchandise and services are expected to grow 15.44 percent in 2021, up 10.39 percentage points from the previous forecast, while its imports are estimated to grow 16.25 percent, up 12.49 percentage points from the earlier forecast.

Citing contract chipmaker Taiwan Semiconductor Manufacturing Co.'s record high of US$30 billion in capital expenditure as an example, Tsai said as many Taiwanese firms are keen to invest this year, Taiwan's private investment is expected to grow 9.10 percent in 2021, up 5.19 percentage points from the previous forecast with capital formation expected to grow 7.71 percent, up 4.21 percentage points from the previous prediction.

Taking into account the impact from the COVID-19 spread, Tsai said the DGBAS has lowered its forecast growth of Taiwan's private consumption by 0.99 percentage points from the previous forecast to 2.75 percent.

With interruption from COVID-19, Chu Tzer-ming (朱澤民), head of the DGBAS, told reporters that Taiwan's GDP growth will likely come closer to 6 percent this year.

Despite the upgrade of the growth forecast in Taiwan, the DGBAS said the evolution of the pandemic worldwide, the possible changes in the major central banks' monetary policies and a tech competition between the United States and China could continue to create uncertainty for the economy at home and abroad.