Taiwan Downgrades Growth Outlook On Weak Investment, Subdued Global Recovery

(RTTNews) - Taiwan's economy is forecast to grow at a slower than previously projected pace in the face of global growth slowdown and weak domestic investment prospects despite a faster momentum in private consumption, the Directorate General of Budget, Accounting & Statistics said on Wednesday.

The real growth outlook for 2023 was lowered to 2.12 percent from 2.75 percent estimated in January. This was also weaker than the 2.45 percent expansion posted in 2022.

Global economic growth will slow down this year due to the demand crunch caused by the war in Ukraine and tightening monetary policy across major economies. Nonetheless, Taiwan's exports are forecast to grow meagerly by 0.04 percent in 2023.

With the easing of domestic COVID-19 control measures, real private consumption is forecast to expand 5.24 percent in 2023. Spending will also benefit from the improvement in the labor market and flourishing tourism.

However, the government observed that the capital spending by companies would be dampened by the uncertainty toward global outlook and the effect of a high base. Real private fixed capital formation is projected to fall 1.13 percent.

Citing the surge in food away from home and residential rent, the government upgraded its inflation outlook for 2023 to 2.16 percent from 1.86 percent.

Data showed that real gross domestic product shrank 0.41 percent annually in the fourth quarter, in contrast to the 3.64 percent expansion in the third quarter.

On a quarter-on-quarter, seasonally adjusted annualized basis, GDP declined 1.46 percent, reversing the 5.81 percent rise in the preceding period.

On the demand side, private consumption advanced 3.24 percent, primarily due to recovery in consumption such as dining out, recreation and transportation. Meanwhile, real gross capital formation dropped 0.25 percent.

Real exports of goods and services fell 5.14 percent, dragged by weakened global demand and inventory adjustment. At the same time, imports decreased 1.65 percent in the fourth quarter.

Another report from the DGBAS showed that the unemployment rate remained unchanged at seasonally adjusted 3.60 percent in January.

On an unadjusted basis, the jobless rate came in at 3.50 percent versus 3.52 percent in December.

The number of people out of work decreased 2,000 from the previous month to 416,000 in January. Compared to the previous year, unemployment was down 14,000. At the same time, total employment increased 20,000 monthly to 11.47 million in January.