Taiwan’s economy forecast to weaken over next 6 months: survey

The partly loaded COSCO SHIPPING LEO, one of the largest container ships in the world, at the container terminal Tollerort (CTT) of HHLA in the Port of Hamburg. (Dirk Pagels/SULUPRESS.DE/picture-alliance/dpa/AP Images)

TAIPEI (CNA) — Taiwan’s economy is expected to continue to weaken over the next six months in the wake of lower investment and private consumption, according to the German think-tank Ifo Institute.

In its latest quarterly World Economic Climate survey released earlier this week, Ifo said the economic climate indicator in Taiwan for the first quarter of this year fell from minus 42.1 in a similar survey released three months ago to minus 52.9 points.

The fall in the indicator for Taiwan indicates the local economy is expected to fare worse over the next six months.

Ifo cited economic experts as saying Taiwan will see its overall economy slow down, with capital formation and private consumption falling over the next six months.

The survey also indicated that Taiwan’s exports and imports could also slow down, while the Taiwan dollar is expected to fall against the U.S. dollar with consumer prices and short-term interest rates and equity prices forecast to fall.

The Ifo survey echoed a move by the Directorate General of Budget, Accounting and Statistics (DGBAS, 行政院主計總處) on Feb. 13 to lower its forecast of Taiwan’s Gross Domestic Product for 2019 by 0.14 percentage points from an earlier estimate in November to 2.27 percent, amid uncertainty over the global economy.

According to the DGBAS, Taiwan’s exports are likely to grow 2.25 percent in 2019, down 0.81 percentage points from an earlier forecast, imports could rise 1.89 percent, down 1.05 percentage points, private consumption is forecast to grow 2.18 percent, down 0.05 percentage points, and capital formation is expected to grow 5.00 percent, down 0.40 percentage points.

As for the global economy, Ifo said the World Economic Climate index fell from minus 2.2 in the previous quarter to minus 13.1 in the first quarter of 2019, indicating a slowdown over the next six months.

“Deterioration of the economic climate was especially strong in advanced economies. The United States, in particular, saw a slump in expectations and assessments, while in the European Union, experts also revised their estimates significantly downwards,” Ifo said in a statement.

“In contrast, the economic climate in emerging and developing countries remained largely unchanged, after declining sharply over the two previous quarters,” Ifo said.

“The climate cooled significantly in the Middle East and North Africa.” Commenting on the Ifo survey, Wu Ming-hui (吳明蕙), head of Taiwan’s National Development Council’s (國家發展委員會) Department of Economic Development, said trade tension between the United States and China still dominate global economic development.

Wu said to offset the impact from external factors, the government will come up with incentives to boost domestic demand, while encouraging Taiwanese investors operating overseas to return and invest at home.

By Liu Li-jung and Frances Huang