Taiwan’s government lowered its 2015 growth forecast to the least since 2009 as an export slump weighs on the island’s economy.
The statistics bureau projects gross domestic product will rise 1.06 percent this year, down from 1.56 percent estimated in August, according to a statement released Friday in Taipei. The economy contracted 0.63 percent last quarter, compared with the 1.01 percent decline in the preliminary report and the median forecast in a Bloomberg survey of economists that saw a 1 percent drop.
Demand from Taiwan’s top buyer China has weakened, the electronics cycle is in a downturn, and local firms are facing stiffer competition from their mainland rivals. Domestic consumption, a pillar for growth earlier this year, also slowed last quarter as an equity slide added to the effects of the export slowdown.
The official 2015 growth forecast would mark the slowest expansion since 2009, when the economy contracted 1.6 percent. Taiwan’s central bank in September reduced its benchmark rate for the first time in six years to 1.75 percent from 1.875 percent. Its next decision comes next month.
"The central bank is likely to follow this with additional easing measures, as the sharp decline in domestic demand growth in the third quarter might not reverse quickly given China’s slowdown and trade stagnation," Goldman Sachs Group Inc. economists wrote in a recent note.
To contact the reporters on this story: Chinmei Sung in Taipei at csung4@bloomberg.net; Justina Lee in Taipei at jlee1489@bloomberg.net To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net Brendan Scott
