Taiwan cuts GDP growth forecast for 2022 and 2023 on weakening exports
Taiwan’s economy is likely to grow more slowly than previously forecast this year and next, the statistics office said on Tuesday, as it also cut its exports outlook due to global inflation, rate rises and China’s zero-COVID policy.
Taiwan, home to the world’s largest contract chip maker TSMC, had benefited over the past two years from soaring demand for tablets, laptops and other electronics to support the work and study from home trend during the COVID-19 pandemic.
But demand for those consumer goods is faltering due to lockdowns in Taiwan’s largest export market China to control the pandemic, interest rate hikes around the world to crimp soaring inflation, and the impact of the war in Ukraine.
Taiwan’s gross domestic product (GDP) for 2022 is now expected to be 3.06% higher than last year, the Directorate General of Budget, Accounting and Statistics said, revising down the 3.76% forecast it issued in August.
That would mark a slowdown from the 6.45% logged for 2021, which was the fastest growth rate since the economy expanded 10.25% in 2010.
“The world’s economic growth rate has become lower, trade volume has decreased, and low demand from other countries has reduced our exports,” agency head Chu Tzer-ming told reporters.
Agency official Tsai Yu-tai added that new U.S. legislation to boost domestic chip manufacturing also brought uncertainty to Taiwanese production, but its impact was hard to assess.
The statistics agency now sees 2022 exports up 8.73% on last year, compared with 13.51% predicted earlier, saying that weakening demand in the second half would overshadow strong growth in the first half.
Taiwan’s exports are a bellwether of demand for global tech giants such as Apple Inc (NASDAQ:AAPL).
For next year, it said it saw 2023 GDP expanding 2.75% compared with a prior estimate of 3.05%, while exports would contract 0.22%, compared with the 2.64% expansion previously predicted.
China’s economy rebounded at a faster-than-anticipated clip in the third quarter, but a more robust revival in the longer term will be challenged by persistent COVID-19 curbs, a prolonged property slump and global recession risks.
The office also revised up Taiwan’s inflation outlook for this year and next. It expects consumer prices to rise 2.94% from a year ago in 2022 and to increase 1.86% in 2023. It had previously forecast a rise of 2.92% this year and 1.72% next year.
In the third quarter, GDP was up by a revised 4.01% on a year earlier, growing slightly more slowly than indicated in a preliminary reading of 4.1%, the agency said.