DGBAS Slashes Economic Growth Forecast to 2.08%

Taipei, Aug. 1, 2012 (CENS)--The Directorate General of Budget, Accounting, and Statistics (DGBAS) revised downward Taiwan's economic growth forecast this year to 2.08% yesterday (July 31), with exports approaching zero growth.

DGBAS expressed that since the European-debt crisis continues to dampen the global trade and momentum for the domestic economic recovery is insufficient, the second quarter may not be the bottom of the economy and it is still uncertain whether the economic growth can retain the 2% mark.

Worse-than-expectation performance in export and investment is the main reason for the downward revision of the economic growth rate. Export growth forecast is slashed from 2.69% to 0.07%. Investments will drop 2.84%, compared with the original forecast of 1.7% decline. The economic growth forecast is 0.95 of a percentage point lower than the previous forecast made in May.

The economy declined 0.16% in the second quarter, the first negative growth since the fourth quarter of 2009. In the first half, Taiwan's economy inched up 0.11%, compared with 2.6% growth of South Korea and 1.65% growth of Singapore. Hong Kong racked up 0.4% growth in the first quarter, according to data available.

The economic figures released by the DGBAS are rough estimate. The DGBAS will further revise the figures before formally publicize its forecast on August 17.

Mei Chia-yuan, special commissioner of DGBAS, pointed out that Taiwan's economy had been stagnant from the second quarter last year to the second quarter this year. At present, it looks that the economy can retain 2% growth this year. However, if the global economy slides further, it will become questionable for the economy to keep the 2% growth mark. Mei was not certain whether the second quarter is the bottom of the economy.

The DGBAS had a gloomy outlook of the global economy, citing the predictions of major international economic research bodies. The International Monetary Fund (IMF), for instance, revised downward in July the forecast for global-trade growth this year to 3.8%, down from last year's 5.9%. Global Insight predicted that although the euro region will not be dismantled, Greece will exit the euro region in one year. It is unlikely that Taiwan's export, investment, and consumption will stage a strong rebound in the second half, according to DGBAS.