DGBAS cuts 2023 GDP forecast to 2.75%

By ECCT staff writers

The Directorate General of Budget Accounting and Statistics (DGBAS) has cut Taiwan’s official forecasts for Gross Domestic Product (GDP) growth rates to 3.06% in 2022 (down 0.7 percentage points from its previous forecast) and to 2.75% for 2023 (down 0.3 percentage points from previously).

According to a DGBAS news release, high prices of oil and raw material caused by Russia’s invasion of Ukraine and bottlenecks in the global supply chain continue to affect the economy. Most economies are shifting from accommodative monetary policy in response to inflationary pressures. These factors might reduce momentum in private consumption and fixed capital formation. In addition, China’s zero Covid policy is weighing on the global economy. Despite the emerging demand for new technological applications and enterprise digitalisation, which supported Taiwan’s exports in the first half of 2022, inflation, tightening monetary policies and pandemic controls in China have all weakened global demand in the second half. In aggregate with services exports, real exports of goods and services are expected to grow by 3.96% in 2022 while real private consumption is projected to grow by 3.29% as the domestic Covid-19 control restrictions are being eased and consumption is returning to normal. Meanwhile continuing investments in the semiconductor industry, reshoring by Taiwanese companies and sustained investment in green energy is expected to boost real private fixed capital formation growth to 7.3% in 2022. Combining the above components as well as spending by the public sector, Taiwan’s real GDP is projected to grow by 3.06% in 2022.