Taiwan's GDP growth forecast raised to 3.94% for 2024: DGBAS

Taipei, May 30 (CNA) The Directorate General of Budget, Accounting and Statistics (DGBAS) on Thursday raised its forecast for Taiwan's gross domestic product (GDP) growth in 2024 to 3.94 percent, the highest in three years.

According to the DGBAS, based on the new forecast which is an 0.51 percentage point increase from the previous estimate in February, the GDP figure this year will reach the highest level since 2021, when growth hit 6.62 percent.

This significant upgrade is due to Taiwan's increased external output, Chen Shu-tzu (陳淑姿), who is the new head of the DGBAS, said.

DGBAS Department of Statistics chief Tsai Yu-tai (蔡鈺泰) further cited artificial intelligence (AI), which continues to develop rapidly, as the key factor.

Exports have greatly benefited from the high demand for AI, Tsai said, adding that the production capacity of Taiwan's high-end semiconductor and information and communication technology sector has significantly increased in recent years.

"Production capacity can be met and demand is strong, boosting exports," Tsai said.

From January to April, the combined exports of electronic components, information and telecommunications and audio-and-video products reached US$95.1 billion, a 25.1 percent increase compared with the same period in 2023, he said.

The government's statistics agency forecasts Taiwan's export to reach US$475.9 billion in 2024, a year-on-year increase of 10.06 percent.

Although the GDP forecast has been hiked based on expanding opportunities brought by AI, the DGBAS said the demand for such applications could fluctuate and thereby impact Taiwan's economic performance.

This emerging technology also carry many uncertainties, as demand for AI applications can soar or drop rapidly, according to Tsai.

In terms of domestic demand, the DGBAS anticipates private consumption will grow 2.77 percent in 2024, up from the previous estimate of 2.64 percent, due to a stable job market as well as an increase in wages and a booming stock market.

Also, Taiwan's private investment growth is forecast to reach 1.52 percent this year, and increase of 0.07 percentage points from the previous projection in February.

This can be attributed to domestic semiconductor businesses continuing to expand their research and development and production processes in order to maintain a cutting edge, the DGBAS said.

Meanwhile, the DGBAS also raised its forecast for local consumer price index (CPI) growth by 0.22 percentage points from the February estimate to 2.07 percent, which is above the 2 percent alert set by the central bank.

Tsai said the CPI was adjusted upward because prices of international raw materials have been higher than expected.

Regarding whether the CPI of over 2 percent could become a new normal, Chen said she doesn't believe it would be, as prices of products often fluctuate and consumers will only feel the pinch if some items that affect their livelihood are hiked up significantly.