2023 GDP forecast cut to 2.12%
By ECCT staff writers, DGBAS
The Directorate General of Budget Accounting and Statistics (DGBAS) has cut its official 2023 forecast for Gross Domestic Product (GDP) to 2.12%, a downward revision of 0.63 percentage points from its previous forecast.
The DGBAS says that global economic growth is projected to slow down due to the demand crunch caused by the ongoing war in Ukraine and tightening monetary policy against inflation across countries, as well as the cooling down of material and product prices and inventory adjustments.
In its latest news release, the DGBAS cited the International Monetary Fund (IMF), which said that falling momentum in global demand would reduce projected global trade volume to 2.4% in 2023, lower than the 5.4% growth posted in 2022. However, the increase in inbound tourists would spur revenue from travel. In aggregate with services exports, real exports of goods and services are expected to grow by 0.04% in 2023, according to the DGBAS.
Meanwhile real private consumption is expected to grow by 5.24% in 2023 as domestic Covid-19 controls have eased, bringing consumption back to normality. Growth will also be boosted by the improvement in the labour market and the rebound in outbound tourism owing to the reopening of borders.
Continuing investments in the semiconductor industry, the reshoring of Taiwan’s overseas companies, sustained investments in offshore wind energy and airline companies expanding aircraft fleets to cope with the increasing cross-border tourism, will all support investment. However, companies’ capital spending may be cautious due to the uncertainty about the global outlook and the effect of a high base. Real private fixed capital formation is therefore expected to decrease by 1.13% in 2023, according to the DGBAS forecast.
The DGBAS has also raised its forecast for the Consumer price Index (CPI) increase in 2023 to 2.16% (year-on-year), an upward revision of 0.30 percentage points from previously, mainly reflecting the extended price surge in food away from home and residential rent. The costs of travel are also expected to rise owing to increasing cross-border tourism.