Taiwan to have 2.3% GDP growth by year’s end: ADB

By John Liu, The China Post

TAIPEI, Taiwan — The Asia Development Bank (ADB) adjusted its forecast of Taiwan’s 2013 GDP growth to 2.3 percent, which is close to the 2.31-percent growth forecast by the Directorate-General of Budget, Accounting and Statistics (DGBAS). The ADB indicated that two main Asian economies, mainland China and India, have experienced slower economic activities, affecting Taiwan and other countries in Asia. Consequently, the ADB adjusted its forecast of Taiwan’s economic growth rate of 3.5 percent in April down to 2.3 percent. Concerns over the U.S. Federal Reserve’s tapering off of quantitative easing have caused investors to retrieve their capital, sending shockwaves throughout capital markets in Asia, analysts said. Although the capital outflow has exposed weaknesses in financial markets in Asia, with high current account balances and high foreign exchange reserves, a financial crisis like the one that occurred in 1997 is unlikely to happen again, analysts said. The Ministry of Economic Affairs (MOEA) said that it has set a goal of boosting the economy to surpass the DGBAS’ forecast, despite unstable economic conditions around the world.

According to a report released by the ADB, with the exception of Japan, economic growth rates in Asia are forecast to be 6 percent and 6.2 percent in 2013 and 2014, respectively. The Southeast Asian area is forecast to have 4.9-percent and 5.3-percent GDP growth in 2013 and 2014, respectively. The ADB forecast a 7.6-percent and 7.4-percent economic growth rate for mainland China in 2013 and 2014, respectively, and 4.7-percent and 5.7-percent economic growth rate for India in 2013 and 2014. The figures were adjusted downward from the ADB’s previous forecasts. While China is trying to wrestle with its credit bubble and shadow banking system, India’s growth is hampered by its weak infrastructure and slow investments, the ADB said. The MSCI Asia Pacific Index has risen 7.5 percent so far this year, much lower than the 19-percent rise in the S&P 500 Index in the U.S.