Taiwan raises GDP growth forecast to 11-year high

11/26/2021 08:41 PM
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CNA file photo
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Taipei, Nov. 26 (CNA) Taiwan raised its gross domestic product (GDP) growth forecast for 2021 to 6.09 percent, an 11-year high attributed to increased local investments and a strong export performance.

The Directorate General of Budget, Accounting and Statistics (DGBAS) upgraded Taiwan's GDP growth by 0.21 percentage points Friday from the previous estimate made in August.

This marks the highest annual GDP growth since 2010, when the economy grew by 10.25 percent after bouncing back from the global financial crisis.

The DGBAS said that for the fourth quarter, Taiwan's economy would grow 4.15 percent, up 0.14 percentage points from an earlier forecast. There was also a 3.70 percent rise in the third quarter, compared with the preliminary reading of 3.80 percent released in October, the DGBAS said.

In addition, the DGBAS has also raised Taiwan's 2022 GDP growth forecast to 4.15 percent, an increase of 0.46 percentage points compared to the previous forecast.

The DGBAS said tech companies in Taiwan, in particular from the semiconductor industry, and telecom operators had been keen to invest to meet robust global demand for emerging technologies such as 5G.

The agency expects private investment will grow 18.20 percent in the fourth quarter, up 7.80 percentage points from the previous estimate, and rise 18.88 percent for the whole of 2021, up 6.99 percentage points from an earlier forecast.

In 2021, capital formation in Taiwan is expected to grow 14.96 percent from a year earlier, up 5.49 percentage points from the previous estimate, according to the DGBAS.

As for external trade, the DGBAS said Taiwan's exports in merchandise and services in the fourth quarter were expected to grow 10.35 percent on the back of solid global demand for both tech gadgets and old economy items. The latest figure represents a downgrade of 1.80 percentage points from the August forecast.

For 2021, Taiwan's exports in merchandise and services are expected to grow 16.75 percent, a cut of 1.18 percentage points from the previous forecast.

The downgrade should be regarded as minor given that Taiwan is expected to enjoy strong double digit growth for the year, the DGBAS said.

Imports are expected to grow 18.49 percent, up 0.67 percentage points from the earlier estimate.

The DGBAS said private consumption in the second and third quarters of 2021 had been affected by an outbreak of domestically transmitted COVID-19 cases taking place in mid-May, resulting in a decrease of 0.46 percent and 5.60 percent, respectively, from a year earlier.

But with the situation under control, the DGBAS said, private consumption growth is expected to return to positive territory in the fourth quarter, with a 3.62 percent increase compared with a year earlier. This represents a downgrade of 0.39 percentage points from the August forecast.

For the whole of 2021, however, private consumption is expected to grow only 0.07 percent from a year earlier, down 1.29 percentage points from the previous estimate, the DGBAS said.

The DGBAS added that Taiwan's GDP is expected to grow 2.79 percent, 3.97 percent, 4.89 percent and 4.86 percent, respectively, in the first, second, third and fourth quarter of 2022.

Taiwan's private consumption is expected to bounce back by 5.36 percent in 2022 as the government has implemented measures to stimulate the economy and has also raised salaries for government officials, teachers and military personnel in addition to increasing the minimum wage, the DGBAS said.

Private investments are expected to grow 2.52 percent in 2022, with capital formation up 2.99 percent, while exports and imports for 2022 are expected to grow 3.39 percent and 2.33 percent, respectively, from a year earlier, the DGBAS added.

The consumer price index for 2021 and 2022 is expected to grow 1.98 percent and 1.61 percent, respectively, according to the DGBAS.

Meanwhile, Tsai Hung-kun (蔡鴻坤), deputy head of the DGBAS, cited a report released by the International Monetary Fund (IMF) in October as saying that Taiwan's GDP per capita is expected to hit US$32,787 in 2021. This means it still lags behind South Korea's per capita figure of US$35,000.

But, the IMF report predicted that Taiwan's GDP per capita would hit US$42,802 by 2025, topping South Korea's NT$42,719.

(By Pan Tzu-yu and Frances Huang)

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