TAIPEI: Taiwan's government trimmed its 2019 economic growth forecast on Wednesday (Feb 13), showing that slowing global expansion and weaker tech demand are denting the island's pivotal exports and outlook.
The growth forecast was cut to 2.27 per cent from the 2.41 per cent seen in November. The government also cut its forecast for 2019 export growth to just 0.19 per cent, from November's 1.96 per cent.
The 2019 revision are mainly due to "growing uncertainties over global economic growth", the Directorate General of Budget, Accounting and Statistics said, adding that slowing demand for electronics including smartphones has "dealt an impact" to supply chain manufactures.
Aidan Wang, Cathay Financial Holdings economist, said the reduced 2019 forecast was "still too optimistic" and that it will be "tough" for Taiwan to keep growth above 2 per cent this year. The statistics agency marginally raised fourth-quarter annual growth to 1.78 per cent from 1.76 per cent, putting full-year 2018 GDP at 2.63 per cent, from the preliminary 2.60 per cent.
In all of 2018, exports rose 5.9 per cent from a year earlier, but they declined in both November and December, contributing to the slowest economic growth for a quarter since the second period of 2016.
Taiwan is one of Asia's major exporters especially of technology goods, and its export trend is a gauge of global demand for technology gadgets.
The government on Wednesday also reduced its inflation outlook for 2019 to 0.73 per cent from 0.96 per cent projected in November.
Last month, the Ministry of Economic Affairs said it was "not too optimistic" that first quarter export orders growth would be strong, and it expected January ones to decline between 11.8 per cent to 14.1 per cent due to slowing demand for tech products.
Analysts expected the growth to slow further in 2019 as its technology exports floundered amid weaker global demand and the US-China trade war.
Cathay Financial's Wang said Taiwan "might start to see the growth to slowly resume to normal in the second half", adding that a lower base for that period and possible improvements in ties between the United States and China could boost the island's economy.