Taipei, Nov. 1, 2012 (CENS)--The Directorate General of Budget, Accounting, and Statistics (DGBAS) revised downward, for the ninth time, its forecast for Taiwan's economic growth this year to 1.05% yesterday (Oct. 31). The DGBAS alerted that languid exports have affected employment and consumption, pushing Taiwan's economy to the quagmire of “anemic growth.”
The DGBAS estimated that Taiwan's GDP grew 1.02% in the third quarter, departing the shadow of negative growth in the second quarter. However, in view of the shaky economic recovery of China, the U.S., and Europe, the DGBAS is bearish about consumption and export momentum in the third and fourth quarter, slashing its forecast for Taiwan's GDP growth this year to 1.05%, to the brink of the 1% mark. It also cut its forecast for Taiwan's economic growth rate next year to 3.09%.
Forecast for Taiwan's GDP growth in the fourth quarter plunged to 2.83%, compared with the forecast of 4.23% made in August. As a result, the schedule for raising the basic wage in the second quarter next year will not be met, since the Executive Yuan (the Cabinet) hinges the basic-pay hike on GDP growth rate exceeding 3% for two consecutive quarters.
Mei Jiayuan, a DGBAS official, characterized the status of Taiwan's economy as anemic growth. In addition, Taiwan's economy is recovering languidly, due to insufficient growth momentum, similar to the tepid recovery of the U.S. economy.
The term “anemic growth” was coined by Robert B. Zoellick, former chief executive of the World Bank, in describing the sluggish recovery of the global economy. Recently, the International Monetary Fund (IMF) described the slow-paced recovery of the U.S. economy as “tepid recovery,” saying the U.S. economy will not score real recovery until 2013.
Kao Chih-hsiang, chief of economic forecast section, DGBAS, noted that although exports scored double-digit growth in September, the basis for Taiwan's economic recovery is not solid. He attributed the exceptional export growth rate to low comparison base last year, caused by fire accidents at the Mailiao factories of Formosa Plastics Group (FPG), adding that exports value in September reached US$27 billion, which is not especially high. In addition, recently quite a number of hi-tech firms expressed plans to adjust their inventory levels at year end, a trend which will inevitably affect exports in the fourth quarter.
The DGBAS predicted that exports, which account for 70% of Taiwan's GDP, will drop 2.5% this year, compared with the forecast of 1.72% decline made in August. Sluggish exports have put a damper on consumption and employment. The DGBAS predicted that private consumption will inch up 0.37% in the third quarter, compared with 0.76% growth in the second quarter and the lowest since the third quarter of 2009.
(by Philip Liu)