Academia Sinica forecasts Taiwan's GDP to grow 3.02% in 2024

Taipei, Dec. 22 (CNA) Taiwan's gross domestic product (GDP) should grow 3.02 percent in 2024 due to higher exports driven by demand for emerging technologies such as artificial intelligence applications, Academia Sinica said Friday.

Taiwan's economy will benefit from rising private investment led by a rebound in exports of information and electronics devices as well as continued growth in private consumption, according to Academia Sinica, Taiwan's top research institution.

Forecast for 2023

Should the forecast be accurate, it would top the 1.34 percent GDP growth anticipated by Academia Sinica for 2023.

The institution has revised its forecast for 2023 growth downwards twice since it projected 2.41 percent real growth forecast for 2023 at the end of 2022.

It revised that to 1.56 percent in July and then to 1.34 percent on Friday, citing a weakened global economy affected by fragile demand from end-users and bloated inventories that are still being drawn down.

Academia Sinica's forecasts were slightly more cautious than those made by the government.

The Directorate General of Budget, Accounting and Statistics (DGBAS) forecast in November that Taiwan's GDP will grow 1.42 percent in 2023 and 3.35 percent in 2024.

Dec. 14: Central bank raises Taiwan's GDP growth forecast to 3.12% for 2024

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Lin Chang-ching (林長青), an adjunct research fellow of Academia Sinica's Institute of Economics, said exports, investment and consumption are all expected to drive Taiwan's GDP growth in 2024, when the "local economy will see the spring arrive as the snow melts."

In 2024, Taiwan's merchandise and service exports are expected to grow 6.23 percent after a 4.39 percent decline anticipated in 2023, while imports will grow 8.03 percent in 2024, compared with a predicted drop of 5.07 percent in 2023, the institution predicted.

Lin said solid demand for emerging tech applications and consumer electronics products should spark the rebound in exports in 2024.

Investment will also be higher as IT and electronics manufacturers invest to expand capacity to meet stronger demand and the private sector invests more in green energy development to cut carbon emissions, Lin said.

Private investment, consumption

Because of those factors, Academia Sinica forecast Taiwan's private investment to grow 3.05 percent in 2024 after a 9.70 percent decline anticipated for 2023, and fixed capital formation will rise 4.23 percent in 2024 from an anticipated 7.35 percent decline in 2023.

Academia Sinica also expected Taiwan's private consumption to grow 3.01 percent in 2024 after an expected 8.32 percent increase in 2023, anticipating that greater cross-border travel, a 4.05 percent hike in the minimum wage, and a 4-percent wage hike for government employees to boost spending.

Trade tensions

While Taiwan's economy will improve in 2024, Lin said the world economy remained vulnerable to uncertainties that could affect local growth, including downside risks of the Chinese economy and escalating trade tensions between Washington and Beijing, Lin said.

When asked to comment on a move by China to suspend preferential tariff treatment for imports of 12 Taiwanese petrochemical products from Jan. 1, 2024, Lin said the impact would be limited.

China's Customs Tariff Commission on Tuesday announced sanctions on 12 petrochemical products, including propylene and paraxylene, which currently face reduced tariffs under the Economic Cooperation Framework Agreement (ECFA) the two sides signed in 2010.

The measures come in response to "unilateral, discriminatory trade restrictions" by Taiwan on imports of Chinese products in violation of the ECFA, the commission said, referring to the results of a trade probe that Beijing announced last week.

Lin said old economy industries are expected to feel more of a pinch from China's sanctions than high-tech companies, but Taiwan's economy will improve next year to offset the impact.

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Speaking at a different venue, Economic Affairs Minister Wang Mei-hua (王美花) said she did expect the sanctions to adversely affect Taiwan.

According to Wang, Taiwan's exports of petrochemical products to China totaled about US$1.8 billion in the first 11 months of this year, a small fraction of the country's total exports of US$392.56 billion.

Yueh Chun-hao (岳俊豪), a section chief of the government-funded Industrial Technology Research Institute, worried, however, that China's sanctions would extend to Taiwanese machine tools and auto parts, which would affect some of Taiwan's small and medium-sized enterprises.

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