DGBAS raises 2021 GDP forecast to 5.46%
By ECCT staff writers
Taiwan’s Directorate General of Budget Accounting and Statistics (DGBAS) has raised its forecast for Taiwan’s full year 2021 Gross Domestic Product (GDP) growth to 5.46%.
According to a news release by the DGBAS, while the latest wave of the Covid-19 pandemic since mid-May has “temporarily caused severe impacts on Taiwan’s economic activities”, the government’s control measures to tackle the increase in new Covid-19 cases are expected to contain the pandemic in the third quarter of 2021, while Taiwan’s export-related manufacturing activities will be little affected.
The DGBAS attributes this to capacity expansion brought by massive investments of semiconductor manufacturers, digitalisation and remote working and education demand spurred by the pandemic and the emerging demand for new technological applications, such as 5G, automotive electronics, high performance computing and IoT. Meanwhile, various recent economic and non-economic events, such as the Texas freeze, the Indian Covid-19 pandemic and US President Biden’s infrastructure plan, might bring or shift new orders to Taiwan’s manufacturers. In addition to a resurgence of global trade, all these factors will support Taiwan’s exports in 2021. It is expected that real exports of goods and services will rise by 15.44% year-on-year in 2021.
In addition, real private consumption is expected to grow by 2.75%, supported by the stable labour market, the emergence of touchless services, such as online shopping and food delivery, and the effect of a low base due to the pandemic in 2020. However, the ban on group activities and other Covid-19 control measures might severely dampen consumer spending in the short run.
Real private fixed capital formation is anticipated to grow by 9.10%, according to the DGBAS. In addition to accelerating investments of the semiconductor industry and reshoring by Taiwan’s overseas companies, this is also being driven by 5G infrastructure, offshore wind energy, increasing reconstruction of unsafe and old buildings, and airline companies expanding aircraft fleets.
Combining the above components as well as the public sector, Taiwan’s real GDP is projected to grow by 5.46% in 2021, a 0.82 percentage point upward revision from the previous forecast.
The DGBAS has also raised its 2021 forecast for the Consumer price Index (CPI) by 0.39 percentage points to 1.72%, mainly reflecting rising crude oil and raw material prices.
In the news release the DGBAS also reported that Taiwan’s real gross domestic product (GDP) for the full year 2020 came in at 3.12% and, according to the latest preliminary estimate, GDP growth in the first quarter of 2021 was 8.92%.