Worst Time for Taiwan's Economy Is Over: DGBAS

Taipei, Nov. 26, 2012 (CENS)--Thanks to upturn in exports and investment, the Directorate General of Budget, Accounting, and Statistics (DGBAS) revised upward on Nov. 23 its forecast of Taiwan's economic growth this year to 1.13%, confirming that the growth rate will hold onto the 1% mark. Although private consumption will remain in the doldrums, the DGBAS expressed that the economy has passed the worst time and will score a moderate recovery next year.

The forecast follows the ninth downward revision of the GDP growth forecast this year to 1.05% by the DGBAS at the end of October. The reversal in the growth forecast is attributed to the consolidated recovery of the U.S. and Chinese economies, which has induced upturn in Taiwan's exports and investments.

Kao Chih-hsiang, chief of economic forecast section, DGBAS, expressed that despite year-on-year decline of exports in the first three quarters, exports will score positive growth in the fourth quarter, thanks to launch of new tablet PCs and smart phones, as well as lower-than-expectation of inventory adjustment by semiconductor firms. As a result, the DGBAS reduced the forecast scale of export decline for the entire year to 2.16%, a moderate improvement over the original forecast of 2.5% decline.

Kao Chih-hsiang noted that although the global economy will stage a modest recovery at best next year, due to the financial cliff of the U.S. and the persistent European-debt crisis, barring eruption of major unexpected financial deterioration in the next two months, Taiwan's export upturn will continue into next year, becoming a major driver for next year's economic growth. Consequently, the DGBAS predicted that Taiwan's exports will grow 5.11% and GDP will advance 3.15% next year, 0.06 of a percentage point higher than the previous forecast.

In the DGBAS's latest forecast, private consumption will slide continuously, due in part to the reform of the government for securities transaction gains tax and pension payment for public functionaries, causing uncertainty in the minds of consumers.