OUTBREAK DEPENDENT: Private consumption rose 4.66 percent last quarter and might expand 2.75 percent this year, down from a previous estimate of 3.74 percent
By Crystal Hsu / Staff reporter
The Directorate-General of Budget, Accounting and Statistics （DGBAS） yesterday raised its forecast for Taiwan’s GDP growth this year to 5.46 percent, up 0.82 percentage points from its projection in February as the global economic scene grew more favorable for exports and private investment.
A COVID-19 outbreak in Taiwan is much worse than last year, but would not affect manufacturing activity or slow the export-focused economy, if it can be brought under control by next quarter, DGBAS Minister Chu Tzer-ming （朱澤民） said.
Exports, the main growth driver at more than 60 percent of GDP, are expected to expand 20.4 percent this year, more than doubling the preceding projection, as a spate of incidents around the world allowed local firms across sectors to get order transfers, the DGBAS said.
Global technology giants sought help with local semiconductor and petrochemical firms after a harsh snowstorm hit Texas, causing power outages in the US state in February, Chu said.
Local shipping companies have benefited from freight rate hikes following a blockage of the Suez Canal in March and shipping chaos induced by spiraling COVID-19 infections in India, it said.
Local steel makers have won extra orders after China introduced a carbon-neutral policy that has caused a global supply crunch, it said.
The agency more than doubled its forecast for private investment to an increase of 9.1 percent this year, as aggressive capital spending plans by Taiwan Semiconductor Manufacturing Co （台積電） have stimulated investment by companies in its supply chain, the DGBAS said.
In addition, local firms continue to shift production lines from overseas amid a global supply chain realignment, it said.
On the domestic front, private consumption, which increased 4.66 percent last quarter, might expand 2.75 percent this year, down from an estimate of 3.74 percent previously, if social distancing measures and vaccinations can keep the virus outbreak at bay next quarter, Chu said.
Business at retailers, restaurants and in the tourism sector have frozen as Taiwanese avoid going out, Chu said, adding that food delivery services and e-commerce operators have flourished during the voluntary lockdown.
Securities houses also reaped a windfall as daily turnover in local bourses augmented drastically, thanks to a spike in foreign and retail participants, the DGBAS said.
Inflation risks picked up noticeably, but would remain controllable, the agency said, adding that it expects consumer prices to increase1.72 percent this year.
The wholesale price index would rise 4.56 percent, an upward revision of 3.9 percentage points, as demand for oil and raw materials builds up rapidly amid an improving global economy, it said.