Economy

Taiwan’s economic growth forecast trimmed

Negative growth in exports is cited by the TRI as a key reason for trimming back the island’s latest economic forecast. (Photo: Huang Chung-hsin)

• Publication Date：06/14/2012
• Source： Taiwan Today
• By  Meg Chang

Taiwan’s economic growth forecast for 2012 was cut to 2.52 percent from 4.02 percent June 13, a sign that weak internal and external demand is taking its toll on local business activity.

The prediction, issued by Taiwan Research Institute, is the most pessimistic on Taiwan’s economic outlook by a major think tank to date. It is also the second forecast below the much-vaunted 3 percent mark following a 2.45 percent estimate June 6 by economists from National Taiwan University.

Wu Tsai-yi, president of the TRI, said Taiwan’s public and private sectors must face up to the fact that the domestic economy is feeling the pinch from home and abroad.

“Although many thought Taiwan’s economy had bottomed out in the first quarter, negative growth in exports and production for the first five months of the year show this lackluster state continuing into the second quarter.”

The estimated contraction in gross domestic product for this period was 0.18 percent, according to the TRI.

Wu said the European sovereign debt crisis, weak U.S. economic and employment figures, Japan’s stagnant recovery hamstrung by a strong yen, and rising local electricity and oil prices are the main reasons for the downward revision.

“We expect the economy to gradually pick up from the third quarter on the strength of stronger numbers coming out of Europe and the U.S.,” he added.

The TRI predicts growth of 3.75 percent and 5.81 percent for the third and fourth quarters, respectively, while consumer prices will rise 1.93 percent for the year.

In their latest forecasts, the Directorate-General of Budget, Accounting and Statistics; Taiwan Institute of Economic Research; Asian Development Bank; and Global Insights peg local GDP growth for the year at 3.03 percent, 3.38 percent, 3.4 percent and 3.5 percent, respectively. (JSM)

Write to Meg Chang at sfchang@mail.mofa.gov.tw