Taiwan cuts GDP forecast, export outlook as global demand weakens

TAIWAN’S economy will probably grow more slowly in 2023 than previously forecast, the government’s statistics office said on Friday (May 26), as weakening global demand weighs heavily on its key technology exports. Taiwan, home to major tech companies including the world’s largest contract chip maker TSMC, has seen its exports contracting amid interest rate hikes around the world in response to rising inflation and growing US-China trade tensions. Export orders slipped for an eighth straight month in April and missed forecasts.

The island’s gross domestic product (GDP) is now expected to expand 2.04 per cent in 2023 from last year, the Directorate General of Budget, Accounting and Statistics said, revising down its earlier 2.12 per cent growth forecast.

First-quarter GDP fell by a revised 2.87 per cent year on year versus a preliminarily forecast 3.02 per cent per cent fall, the agency said, the worst performance since 2009.

“First-quarter inventory adjustment was very obvious,” the agency’s deputy chief Tsai Hung-kun told reporters, adding that the fourth-quarter’s adjustment was NT$50.5 billion (S$2.2 billion), followed by NT$24.4 billion in the first quarter of this year, a declining trend that will continue in the second quarter.

“Though the economic growth was negative, domestic demand performed pretty well,” he said, adding that unemployment was at its lowest in more than two decades.

The statistics agency now sees 2023 exports falling 7.27 per cent from last year, compared with a 5.84 per cent slide predicted earlier.

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Taiwan’s economy has slipped into recession after contracting for two quarters in a row, and the central bank governor warned this week it may not rebound until the fourth quarter.

Governor Yang Chin-long said on Wednesday that policymakers will weigh both inflation and economic growth when making their next interest rate decision on June 15. It has raised rates five times since March last year.

The statistics office also revised upwards Taiwan’s inflation outlook for 2023 to 2.26 per cent, versus a previous forecast of 2.16 per cent. REUTERS