2022 GDP forecast raised to 4.42%
By ECCT Staff
Taiwan’s real gross domestic product (GDP) grew by 4.86% year-on-year in the fourth quarter of 2021 and by 6.45% for the whole 2021, according to the latest preliminary estimate by the Directorate General of Budget Accounting and Statistics (DGBAS). Looking ahead, the DGBAS expects Taiwan’s GDP to rise by 4.42% in 2022.
According to a DGBAS news release, despite uncertainty, the impact of Covid-19 on the global economy will be milder in 2022. World trade volume is projected to continue growing by 6.0% in 2022, according to the International Monetary Fund (IMF). The domestic capacity expansion of semiconductor manufacturers and reshoring overseas companies concurrently in response to emerging demand for new technological applications, such as 5G-related and high performance computing (HPC) applications, and global demand will support Taiwan’s exports.
In addition, as border controls are eased gradually, revenue from inbound visitors and travel is expected to gradually pick up. In aggregate with services exports, real exports of goods and services will grow by 5.53% in 2022, according to the news release.
In addition, the DGBAS expects real private consumption to grow by 5.10%, mainly driven by wage and income raises, likely supported by the robust corporate profitability, salary lifting measures, and the effect of a low base. Although some local cases of the Omicron variant have emerged recently, the impact on consumer spending is expected to be limited.
Real private fixed capital formation will grow by 5.65%, according to the news release. In addition to the continuing investment of semiconductor industry and the reshoring of Taiwan’s overseas companies, it is also driven by ongoing investment in offshore wind energy, and transportation companies expanding fleet capacity.
Combining the above components as well as public sector spending, Taiwan’s real GDP is projected to grow by 4.42% in 2022, an upward revision of 0.27 percentage points from the previous forecast.
The DGBAS expects the Consumer Price Index (CPI) will increase 1.93% in 2022, an upward revision of 0.32 percentage points from the previous projection, mainly reflecting rising crude oil, raw materials and food prices.