Taiwan's 2023 GDP growth forecast cut to 1.42%, lowest since 2008: DGBAS

Taipei, Nov. 23 (CNA) In the wake of a severe contraction in exports and sluggish private investment, the Directorate General of Budget, Accounting and Statistics (DGBAS) announced Tuesday that it has trimmed its forecast for Taiwan's gross domestic product (GDP) growth in 2023 to 1.42 percent, the lowest level since the global financial crisis in 2008.

The forecast was a downgrade of 0.19 percentage points from the August prediction of 1.61 percent, according to the DGBAS. If the economy grows as predicts, growth in 2023 will dip to the lowest level since 2008, when the country's GDP rose by just 0.7 percent.

However, the DGBAS said economic fundamentals will improve in line with the global economy in 2024, when GDP is expected to grow 3.35 percent, an update of 0.03 percentage points from an earlier estimate of 3.32 percent made in August.

As global demand for finished goods remains weak, and industries are continuously adjusting their inventories, the forecast for the annual real growth rate in goods and services exports for 2023 has been revised downward to a contraction of 3.75 percent, a significant reduction of 2.01 percentage points from the forecast made in August, the DGBAS said.

Given economic uncertainties, companies are becoming increasingly cautious with investment plans, which, coupled with a high baseline, led to the projection that private investment for 2023 will see a real contraction of 9.81 percent, representing a downward revision of 3.88 percentage points from the August forecast, it added.

The crucial factors in the decision to again revise downwards the economic growth rate were that the performance of exports and investment both fell short of expectations, DGBAS head Chu Tzer-ming (朱澤民) told a press conference.

However, domestic consumption remains robust and is expected to add momentum to the economy, based on the expectation that the number of inbound tourists will continue to grow and surpass the goal of 6 million by the end of the year, Chu added.

The COVID-19 pandemic has significantly disrupted the global economic landscape, but Taiwan's export manufacturers have demonstrated strong resilience, Chu said, adding that exports will not necessarily cool down next year.

Exports, investment, and private consumption will maintain their growth momentum next year, with the economic situation predicated to be steady growth, Chu said.

Meanwhile, the DGBAS predicts that the pressure of rising prices in the service sector will persist, despite weakening demand leading to a fall in international raw material prices.

After taking into account the pressure of rising prices in the service sector, the DGBAS said the Consumer Price Index (CPI) is expected to grow 1.64 percent in 2024, a slight upward revision of 0.06 percentage points from the August forecast.

Nevertheless, Chu said inflationary pressure is forecast to ease in 2024 gradually, considering downwards trend in international commodity and oil prices.