Taiwan's GDP growth forecast upgraded to 3.43% for 2024

Taipei, Feb. 29 (CNA) The Directorate General of Budget, Accounting and Statistics (DGBAS) on Thursday slightly increased its forecast for Taiwan's gross domestic product (GDP) growth in 2024 to 3.43 percent, the highest in three years.

According to the DGBAS, based on the new forecast which is an 0.08 percentage point increase on the previous estimate in November, 2024 GDP growth will reach the highest level since 2021, when growth hit 6.62 percent.

Speaking with reporters, DGBAS head Chu Tzer-ming (朱澤民) said the upwards revision of the 2024 GDP growth forecast largely reflects a relatively low comparison base as the agency revised downward Taiwan's economic growth for 2023 to 1.31 percent from an earlier estimate of 1.42 percent.

The downward revision for GDP growth in 2023 came after the DGBAS cut growth for the fourth quarter of the year from 5.22 percent to 4.93 percent, due to a weaker-than-expected performance, Chu said.

However, as the local economy makes a comeback this year, investment and consumption are expected to grow, he added.

The DGBAS said the local export-oriented economy is expected to continue to benefit from the revival in global demand in 2024, with the popularity of emerging technologies such as artificial intelligence applications, high performance computing devices and automotive electronics, expected to push up outbound sales.

Nevertheless, the DGBAS still cut its growth forecast for Taiwan's exports of merchandise and services by 1.20 percentage points from the November estimate to 5.90 percent for 2024, while the import growth forecast has been cut by 2.46 percentage points to 6.24 percent.

Despite the downgrade of Taiwan's export growth for 2024, Tsai Yu-tai (蔡鈺泰), chief of the DGBAS's Department of Statistics, said it is still estimated that Taiwan's exports of merchandise will hit US$458.9 billion, the second highest in history, behind only US$479.4 billion in 2022.

In terms of domestic demand, the DGBAS anticipates private consumption will grow 2.64 percent in 2024 on the back of an increase in wages and a booming stock market, but the growth forecast represents a 0.24 percentage point downgrade from the previous estimate.

Amid lingering concerns over geopolitical risk, the global economy is expected to recover at a moderate pace so enterprises in Taiwan are expected to remain cautious about expanding production, which prompted the DGBAS to cut Taiwan's private investment growth forecast by 1.72 percentage points to 1.45 percent for 2024.

Tsai noted that inventories on global markets have returned to healthy levels after recent adjustments.

As a result, Taiwan's capital formation, which is comprised of investments from the public and private sectors, is expected to grow 2.72 percent in 2024, a 1.83 percentage point downgrade from the previous forecast, the DGBAS said.

In 2024, GDP is expected to grow 5.92 percent, 4.55 percent, 2.49 percent and 1.14 percent, in the first, second, third and fourth quarters, respectively, according to the DGBAS.

Meanwhile, the DGBAS also raised its forecast for local consumer price index (CPI) growth by 0.21 percentage points from the November estimate to 1.85 percent, which is still below the 2 percent alert set by the central bank.

The upward revision in inflation came after the DGBAS took into account the stubborn nature of service costs such as dining out expenses and rent, which tend not to fall back after spiking.

The DGBAS said it will continue to pay close attention to external uncertainties such as the monetary policies of major economies, China's economic development, geopolitical tensions and decarbonization, which is expected to impact Taiwan's economy down the road.