Academia Sinica lowers Taiwan’s GDP growth

2015/07/13

Taiwan’s gross domestic product growth estimate for 2015 was revised down to 3.24 percent July 8 by Academia Sinica, reflecting the lower-than-expected pace of global economic recovery during the first half of the year.

Falling 0.14 of a percentage point from the December 2014 estimate by the Taipei City-based research institution, the change stems mainly from lackluster commodity exports and weak private investment. Such a development is also in line with the International Monetary Fund’s recent decision to cut the growth estimates of global trade from 5 percent to 3.7 percent and GDP of developing and emerging countries from 5 percent to 4.3 percent.

According to AS, the reconfiguring of mainland China’s economic structure has also started impacting Taiwan exports and taken a toll on the local economy. This is reflected by the country’s overall monitoring indicator flashing blue in April, the first sign of recession in 32 months.

Given the external stress, AS estimates that commodity and services exports will increase 4.53 percent for the year, down 2.31 percentage points from the previous estimates, imports will go up 2.99 percent, while the trade surplus will surge 16.37 percent.

But the impact of falling GDP is to be partially offset by continuously stable private consumption in the second half of the year bolstered by higher minimum wages and an improving job market.

AS expects private consumption to increase 3.07 percent over last year, or 0.23 of a percentage point above forecast, while the unemployment rate will decrease to 3.81 percent, an improvement of 0.1 of a percentage point.

Despite the drop of 0.66 percent in consumer prices during the first five months of the year, the effect of gradually stabilizing global oil prices and a higher comparison base from last year will see the country’s consumer price index inch back just 0.33 percent for the year.

Source: Taiwan Today (http://taiwantoday.tw/ct.asp?xItem=232411&ctNode=413)