TAIPEI (CNA) — Academia Sinica, the top research institution in Taiwan, on Wednesday cut its forecast for gross domestic product (GDP) growth in 2020, citing concerns over the COVID-19 pandemic.
The institution downgraded its forecast of Taiwan’s GDP growth for 2020 from 2.58 percent, an estimate made at the end of last year, to 1.15 percent, saying the impact of COVID-19 on global demand has hurt Taiwan’s export-oriented economy, as well as domestic private consumption.
Currently, Academia Sinica is more downbeat than the government, the central bank and other think tanks.
The Directorate General of Budget, Accounting and Statistics and the central bank have forecast that Taiwan’s GDP will grow 1.67 percent and 1.52 percent, respectively, while the Taiwan Institute of Economic Research expects growth of 1.58 percent.
Chen Kong-pin (陳恭平), director of Academia Sinica’s Institute of Economics, told reporters that COVID-19 has become the most important threat faced by humanity in the 21st century, forcing many countries to impose lockdowns which has created a global economic crisis.
Academia Sinica said as the pandemic continues to develop, it is impossible to accurately estimate the economic impact.
In response to the more downbeat forecast, Academia Sinica research fellow Ray Chou (周雨田) said many countries have been hit by a second wave of infections after reopening their economies, so the institute is more cautious about the future.
Amid weakening global demand caused by a slowdown in business activity, Academia Sinica has slashed its growth forecast for Taiwan’s export of merchandise and services from an increase of 2.56 percent estimated in December to minus 3.72 percent, while also lowering its growth forecast for imports from a rise of 2.52 percent to minus 4.13 percent.
Academia Sinica said it expects private consumption in Taiwan to fall 0.30 percent in 2020, compared with an earlier estimate of a 2.01 percent increase, while private investment is forecast to grow 2.05 percent, a downgrade from an earlier estimated 3.67 percent increase.
The Institute of Economics left capital formation growth unchanged at 4.11 percent for 2020 with government investment expected to grow 10.90 percent, a significant upgrade from 3.97 percent.
After growing 1.59 percent in the first quarter, Academia Sinica expects Taiwan’s economy to grow 0.19 percent, 1.21 percent and 1.61 percent, in the second, third and fourth quarters.