Taiwan cuts 2024 GDP growth estimate to 3.90%

Taipei, Aug. 16 (CNA) Taiwan on Friday lowered its forecast for gross domestic product (GDP) growth in 2024 to 3.90 percent, citing a weaker-than-expected export performance by old economy industries.

The Directorate General of Budget, Accounting and Statistics (DGBAS) said it has lowered Taiwan's GDP growth forecast by 0.04 percentage points from the previous estimate of 3.94 percent made in May to 3.90 percent for 2024, while it anticipates economic growth in 2025 will hit 3.26 percent.

The estimated GDP growth for 2024 of 3.90 percent is the highest level since 2021, when the local economy grew 6.62 percent, showing stable growth, DGBS head Chen Shu-tzu (陳淑姿) told reporters, adding that growth in 2025 will also breach the 3 percent mark.

The DGBAS said riding the rebound in global demand as well as the rising popularity of artificial intelligence development, the local electronics sector, which serves as the backbone of Taiwan's outbound sales, enjoyed an increase in exports.

However, the rebound appears uneven as the old economy sector is lagging its tech counterparts, the DGBAS said.

The DGBAS forecast Taiwan's exports of merchandise and services will grow 7.76 percent in 2024, a 0.68 percentage point cut from the May estimate, while imports are expected to grow 9.54 percent, an upgrade of 1.01 percentage points from the previous estimate.

Also speaking with reporters, DGBAS Department of Statistics chief Tsai Yu-tai (蔡鈺泰) said despite the downgrade in the export growth forecast, Taiwan will still enjoy a solid performance in outbound sales, in particular in the electronic components and information communications technology industry.

The DGBAS appeared more upbeat about domestic demand in Taiwan.

As the local job market has remained stable with wages on the rise and the booming stock market has pushed up wealth effects, the DGBAS forecast private consumption will grow 2.78 percent in 2024, up 0.01 percentage points from the May prediction.

Private investment is expected to grow 3.89 percent in 2024, an upgrade of 2.37 percentage points from the previous estimate as solid demand for AI applications and high-end tech devices have prompted semiconductor manufacturers to expand production and upgrade technologies, the DGBAS said.

In addition, several international tech brands have pledged to set up research and development centers and data centers in Taiwan, which is also expected to push up private investment further, the DGBAS added.

After growing 6.63 percent in the first quarter, Taiwan's GDP rose 5.06 percent in the second quarter on a preliminary reading, with growth in the first half of the year hitting 5.83 percent, the DGBAS said.

The DGBAS said it expects economic growth in the third and fourth quarters to hit 3.21 percent and 1.12 percent, respectively.

For 2025, the DGBAS said Taiwan's exports and imports of merchandise and services are expected to grow 4.95 percent and 5.02 percent, respectively.

According to the DGBAS, the country's private consumption is expected to grow 2.34 percent in 2025, while private investment is estimated to grow 5.13 percent next year.

While prices of industrial and agricultural raw materials have shown signs of declining, items in the local service sector such as dining out costs, rents and medical care expenses have continued an uptrend, sending local consumer prices higher for 2024, the DGBAS said.

Along with a spike in fruit and vegetable prices caused by bad weather after Typhoon Gaemi in late July, the DGBAS said, the local consumer price index (CPI) growth is expected to hit 2.17 percent, a 0.10 percentage point increase from the May estimate, and above the 2 percent alert set by the central bank.

However, CPI growth is expected to moderate in 2025 to 1.91 percent largely on the back of a relatively high comparison base over the previous year, the DGBAS said.

The DGBAS said Taiwan's GDP per capita is expected to hit US$33,402 in 2024 and reach US$34,684 in 2025.

While the local economy is expected to expand steadily this year, Chen still cautioned over uncertainties ahead, including such major elections as the presidential vote in the United States, changes in monetary policies by major central banks including the U.S. Federal Reserve and the Bank of Japan, escalating geopolitical unease and growing protectionism.