Taiwan lowers 2022 GDP growth forecast hit by COVID and inflation

Cranes are pictured at a construction site on a rainy day in Taipei, Taiwan, Nov. 26, 2021. REUTERS/Annabelle Chih

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  • GDP estimate 2022 +3.91% vs previous forecast +4.42%
  • Q1 growth revised to +3.14% y/y, from +3.06%
  • Export estimate for 2022 +14.62%, vs. +9.69% yoy

TAIPEI, May 27 (Reuters) – Taiwan’s economy is likely to grow at a slower pace this year than originally forecast, the statistics bureau said on Friday, lowering its outlook amid global inflation and dampening consumer demand from COVID-19 at home and abroad.

The downward revision came even as the Bureau of Statistics raised its export growth forecast for this year, with continued strong demand for the island’s tech products, boosted by 5G, electric vehicles and high-end computing.

Gross domestic product (GDP) is expected to grow 3.91% this year, the Directorate-General for Budget, Accounting and Statistics said, after forecasting growth of 4.42% in February.

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That will be slower than the 6.45% recorded for 2021, which was the fastest rate in over a decade since it grew 10.25% in 2010.

The directorate said Taiwan’s rise in COVID-19 infections and inflation caused by the war in Ukraine are weighing on consumers, even as demand for semiconductors, the mainstay of Taiwan’s economy, remained strong.

It said home consumption would be “strongly” hit by the rise in certain cases, leading to a downward revision of 0.5-0.7% growth this year.

Exports are now up 14.62% this year from a previously forecast 9.69%.

Taiwan’s exports are driving demand from global tech giants like Apple Inc (AAPL.O) as the island is a major producer of semiconductors, whose global shortages have rocked companies like automakers and boosted profits for Taiwanese companies.

In the first quarter, GDP grew a revised 3.14% year-on-year, slightly above the provisional figure of 3.06%, the agency added.

Another risk is the slowing economy of China, Taiwan’s main trading partner, where strict measures to control COVID outbreaks have led to an ongoing lockdown in economic hub Shanghai and movement restrictions in numerous cities including Beijing. Continue reading

The statistics bureau said lockdowns in China and their impact on global supply chain shortages are among the uncertainties for Taiwan’s economic growth this year.

Taiwan’s export orders fell in April for the first time in more than two years, hit harder than expected by China’s tough antivirus measures and broader global supply chain disruptions. Continue reading

The bureau also revised its inflation outlook for this year to 2.67% from an earlier forecast of 1.93%.

Taiwan’s central bank is still moving toward tightening monetary policy, its governor Yang Chin-long said earlier this month. In a surprise move in March, the central bank raised its benchmark interest rate, much more than some had expected.

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Reporting by Yimou Lee and Jeanny Kao; Edited by Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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