Taiwan's 2020 GDP forecast raised to 2.54%
By ECCT staff writers
Taiwan’s Gross Domestic Product (GDP) increased by 3.92% year-on-year in the third quarter of 2020 (3Q20), according to a report by the Directorate General of Budget Accounting and Statistics (DGBAS). In the same report the DGBAS also revised up its previous economic growth rates for 1Q20 and 2Q20 to 2.51% and 0.35% (from 2.20% and -0.58%, previously). Given the positive performance, the DGBAS raised its full year 2020 GDP forecast to 2.54%.
The DGBAS has justified the upward revision based on the fact that Taiwan’s manufacturing activity has not been severely affected by theCovid-19 pandemic. Moreover, the capacity expansion of the semiconductor manufacturing industry and reshoring by overseas companies in response to “stay-at-home demand” caused by pandemic and the emerging demand for new technological applications, such as 5G and high performance computing have supported Taiwan's export growth. However, offset by weakened global demand, slumping raw material prices and reducing tourists, it is projected that real exports of goods and services will grow by 1.08%. In the domestic sector, real private consumption is expected to contract by 2.52%, mainly owing to the impact of Covid-19 on residents’ travel expenditure abroad due to the border controls, although this will be partly offset by emerging e-commerce and stay-at-home demand. The government’s relief and stimulus measures have also helped to encourage consumption sentiment and bolster the domestic economy. Meanwhile, real private fixed capital formation is forecast to grow by 1.47%, supported by the continuing investment in the semiconductor industry and 5G network construction.
The DGBAS also revised its forecast for GDP growth in 2021 to 3.8% based on expectations for global trade volume to expand by 8.3% (according to IMF forecasts), increased investments and an expansion in real private consumption of 4.04% year-on-year.