GDP growth in ’16 isn’t likely to reach 2%, say economists

The China Post news staff

TAIPEI, Taiwan –Taiwan may face difficulty reaching 2-percent gross domestic product (GDP) growth this year in light of the latest export data and poor performance in worldwide equity markets, economists said Friday.

Last year, the Directorate General of Budget, Accounting and Statistics (DGBAS, 主計總處) forecast that Taiwan could post at least 1-percent growth in 2015 and 2-percent growth in 2016.

But economists said Friday that 2-percent growth would prove difficult this year due to the yuan’s sharp depreciation, declining oil prices and a continuing slump in exports.

The Taiwan Institute of Economic Research’s (台經院) Macroeconomic Forecasting Center (景氣預測中心) said Friday that fresh factors could lead to a slash in 2016 growth forecasts.

Center Director Gordon Sun (孫明德) cited negative factors like the recent global financial turmoil and struggling Taiwanese and mainland Chinese stocks, which have led to a decline in domestic demand. Rick Lo (羅瑋), director of Fubon Financial Holdings’ economic research center, told the Chinese-language United Evening News that worldwide currency devaluation would affect imports and cause a decline in trade. Devaluation in the yuan would drag down Taiwan’s exports, Lo said, citing this as a more concerning matter than the stock crisis for Taiwan’s economic stability. 2015 Report Due Jan. 29

The previous DGBAS forecasts for 2015 and 2016 were 1.06 percent and 2.32 percent, respectively, higher than the forecasts of many private institutions. Whether Taiwan’s GDP gain reached 1 percent last year will be revealed on Jan. 29 when the DGBAS releases its report for the fourth quarter of 2015. Slow Cross-strait Talks Put Pressure on Economy Economists said that slow negotiations over the cross-strait trade-in-goods pact boded poorly for Taiwan’s economic future.

Economists said that Taiwanese factories were facing the “calm before the storm.”

Roy Chun Lee (李淳), vice president of the Chung-Hua Institution for Economic Research (中經院), said that in the absence of the cross-strait goods pact, the China-South Korea free trade agreement posed a serious threat to Taiwan’s economy. “The storm is indeed heading toward Taiwan,” Lee said. Data from the Ministry of Economic Affairs (MOEA) show that between US$6 million and US$17 million-worth of Taiwanese exports are likely to be lost in favor of more competitive foreign products once the China-South Korea deal takes effect. No Deal on Horizon The MOEA said that mainland China and Taiwan were able to reach a higher degree of understanding in the latest round of talks, but that the next round of official negotiations was not within sight.

Another preparatory discussion may be scheduled instead, said Wu Ming- ji (吳明機), head of the MOEA’s Industrial Development Bureau. Wu said that industrial sectors have been applying pressure on the government to continue negotiations. Talks in the latest round had concentrated on easing tax regulations for agricultural products. The MOEA said it attempted to win tax exemptions for Taiwan’s most competitive products — Taiwan orchids, ornamental fish and frozen squid — and to renegotiate terms for Chinese imports such as apples.