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Ukraine war could curtail Taiwan’s GDP growth by up to 0.4%

Central Bank says expansion of conflict could make 4% growth more difficult for 2022

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The Central Bank sees GDP growth slow slightly if the war in Ukraine expands. 

The Central Bank sees GDP growth slow slightly if the war in Ukraine expands.  (CNA photo)

TAIPEI (Taiwan News) — The growth of Taiwan’s Gross Domestic Product (GDP) will be 0.3% to 0.4% slower than previously forecast due to the war in Ukraine, the Central Bank said Friday (March 11).

Lower growth and stronger inflation of more than 2% were only likely if the conflict intensified and more countries joined in sanctions against Russia, according to the bank’s forecast.

The most recent government predictions, issued in February, saw the economy grow by 4.42% in 2022 and the Consumer Price Index (CPI) increase by 1.93%, CNA reported.

Under current circumstances, the impact of the war on Taiwan’s economy would be minimal, due to limited trade and investment with both Ukraine and Russia, with financial exposure also restricted in size. Only inflation could be a cause for concern, according to a Central Bank report to be presented at the Legislative Yuan March 14.

However, the bank suggested that an expansion of the conflict might affect supply chains and the price of energy, raw materials and food products, damaging consumer confidence in its wake. As a result, it might be difficult for Taiwan to maintain its hopes for at least 4% GDP growth during this year, the report concluded.