Taiwan lowers 2022 GDP growth forecast, hit by COVID and inflation
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[May 27, 2022] TAIPEI
(Reuters) - Taiwan's economy is likely to grow at a slower pace this
year that initially forecast, the statistics office said on Friday,
downgrading its outlook due to global inflation and COVID-19 dampening
consumer demand at home and abroad.
The downward revision came even as the statistics office raised its
export growth forecast for this year, with continued strong demand for
the island's technology products buoyed by 5G, electric vehicles and
high end computing.
Gross domestic product (GDP) is expected to rise 3.91% this year, the
Directorate General of Budget, Accounting and Statistics said, down from
4.42% growth forecast in February.
That will be a slower pace than the 6.45% logged for 2021, which was the
fastest rate in over a decade since it expanded 10.25% in 2010.
The directorate said Taiwan's surge in COVID-19 infections and inflation
driven by the war in Ukraine were affecting consumers, even as demand
for semiconductors, the main plank of Taiwan's economy, remained strong.
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It said consumption at home will be "greatly" impacted by the spike in
cases, leading to a 0.5-0.7% downward revision to growth this year.
It now sees exports rising 14.62% this year, from 9.69% predicted
earlier.
Taiwan's exports are a bellwether of demand for global tech giants such
as Apple Inc, as the island is a major producer of semiconductors, a
global shortage of which has rattled firms like auto makers and boosted
Taiwanese corporate profits.
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Cranes are pictured during a rainy day at a construction site in
Taipei, Taiwan, November 26, 2021. REUTERS/Annabelle Chih
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In the first quarter, GDP expanded by a revised 3.14% from a year earlier,
slightly up from a preliminary reading of 3.06%, the agency added.
Another risk is the slowdown in the economy of China, Taiwan's top trading
partner, where strict measures to control COVID outbreaks have led to the
prolonged lockdown of economic hub Shanghai and movement curbs in numerous
cities including Beijing.
The statistics office said lockdowns in China and their impact on global supply
chain bottlenecks are among uncertainties for Taiwan's economic growth this
year.
Taiwan's export orders fell for the first time in more than two years in April,
taking a larger-than-expected hit from China's strict anti-virus measures and
broader global supply chain disruptions.
The office also revised up its inflation outlook for this year to 2.67% from a
previous forecast of 1.93%.
Taiwan's central bank is still moving in the direction of monetary policy
tightening, its Governor Yang Chin-long said earlier this month. In a surprise
move in March, the central bank raised its benchmark interest rate and by a much
bigger margin than some expected.
(Reporting by Yimou Lee and Jeanny Kao; Editing by Kim Coghill)
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