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Taiwan could report economic contraction in Q3: DBS Bank

Taiwan could report economic contraction in Q3: DBS Bank

Taipei, Oct. 24 (CNA) The Singapore-based DBS Bank has forecast that Taiwan will report an economic contraction for the third quarter due to worse-than-expected export performance amid slowing global demand. DBS said that Taiwan's gross domestic product (GDP) for the July-September period is likely to have contracted by 0.3 percent from a year earlier, lagging behind the bank's earlier forecast of a 0.6 percent increase. The Singapore banking group said that the weaker-than-expected third quarter economy in Taiwan largely reflected falling exports, while a drop in local industrial production also dealt another blow to the local economy. In September, Taiwan's exports fell 14.6 percent from a year earlier, and it was the eighth consecutive month for the country's exports to register a year-on-year fall in exports. Poor export order data was also evidence of Taiwan's economic weakness with September export orders down 4.5 percent from a year earlier, the sixth consecutive year-on-year decline. Last month, Taiwan's industrial production index fell 5.32 percent from a year earlier to 102.96, marking September as the fifth consecutive month for the country to report year-on-year declines in industrial production. DBS is not the only institution predicting an economic contraction for the third quarter. Last week, the Chung-Hua Institution for Economic Research (CIER, ???), one of Taiwan's leading think tanks, said that Taiwan could report a 2.11 decline in the local economy for the July-September period, much more downbeat than DBS. Due to the disappointing third quarter, DBS said it is possible Taiwan's economy will grow less than a rate of 1.4 percent the bank has forecast. For its part, the CIER has trimmed its forecast for Taiwan's 2015 GDP growth to 0.9 percent from an earlier estimate of 3.04 percent. DBS said that after a contraction in the third quarter, peak season effects in the global high-tech business seen in the fourth quarter will help Taiwan's outbound sales regain momentum. The bank said that rising demand for smartphones could serve as a driver for Taiwan's fourth quarter economic growth. The bank said that as the U.S. Federal Reserve is likely to delay an interest rate hike cycle until next year, the global financial market likely faces less downside risks in the fourth quarter. As a result, DBS said, consumption and investment in Taiwan could grow in the current quarter. Meanwhile, DBS has left its forecast of Taiwan's 2016 GDP growth unchanged at 2.9 percent. (By Tsai Yi-chu and Frances Huang)


Updated : 2021-09-17 02:40 GMT+08:00