The Chung-Hua Institution for Economic Research (CIER) has lowered its forecast for Taiwan’s 2023 gross domestic product (GDP) growth to 2.72 percent, citing anticipated global economic weakness, it said Friday.
The forecast was down slightly from the 2.81 percent 2023 growth projection made by the CIER, a leading Taiwanese economic think thank, in October. It also lowered its 2022 GDP growth forecast to 3.04 percent, from 3.28 percent previously.
The CIER’s forecasts were slightly lower than the estimates made by the official Directorate General of Budget, Accounting and Statistics in late November, when it pegged Taiwan’s 2022 and 2023 GDP growth at 3.06 percent and 2.75 percent, respectively.
Nov. 29: Taiwan cuts GDP growth forecast for 2023 to 2.75%
The CIER said it lowered its forecasts on expectations that global growth will fall below 2 percent due to aggressive interest rate hikes by the U.S. Federal Reserve, the ongoing Russia-Ukraine conflict, and trade tensions between the U.S. and China.
That deceleration in global growth is pulling down global demand and having an adverse effect on Taiwan’s export-oriented economy, the think tank said.
Speaking at a news conference, CIER President Chang Chuang-chang (???) said many exporters in Taiwan have had to deal with inventory adjustments by their clients in the second half of 2022, but he still expected Taiwan to outperform the global economy.
If the 2022 growth forecast is achieved, it would mean Taiwan has achieved the impressive feat of posting annual GDP growth of more than 3 percent for four years in a row, Chang said.
Dec. 7: Taiwan November exports see largest percentage year-on-year drop in 7 years
According to the CIER, global trade will decline in 2023 from a year earlier, limiting Taiwan’s growth in merchandise exports to 1.98 percent, down from an expected 8.08 percent increase in 2022.
Merchandise imports are expected to grow 2.46 percent in 2023, down from an anticipated 12.31 growth in imports in 2022, the CIER said.
Meanwhile, the CIER said private investment will grow 2.02 percent in 2023, down from an anticipated 7.01 percent in 2022, because uncertainty over global demand has led many companies in Taiwan to moderate their investment plans.
Capital formation is expected to grow 2.60 percent next year, compared with an estimated 6.89 percent for 2022.
CIER said interest in renewable energy development and urban renewal projects are expected to lend some support to private investment and capital formation in 2023.
Dec. 5: Investment rate expected to hit 27-year high in 2022
Private consumption is expected to get a boost from the lifting of COVID-19 restrictions and serve as the main driver of Taiwan’s economic growth in 2023, the CIER said.
It expected private consumption to rise 4.26 percent in 2023, up from an expected 3.42 percent for 2022, and contribute about 1.97 percentage points to the year’s GDP growth, the think tank said.
In terms of inflation, the CIER forecast the consumer price index (CPI) to rise 1.97 percent in 2023, which would be lower than the 2.94 percent rise anticipated for 2022 because of the dampening effect on prices of weakening global demand.
Also at the news conference, Lien Hsien-ming (???), vice dean of the International College of Innovation at National Chengchi University, said Taiwan needed to seize on opportunities to speed up its pace of R&D to boost its competitiveness as the global supply chain undergoes a restructuring.
Taiwan also should capitalize on the global attention focused on the Taiwan Strait and boost the visibility of Taiwanese brands, while also trying to attract more foreign investment to help drive wages higher, which have stagnated for years, Lien said.
Source: Focus Taiwan News Channel