TAIPEI (Taiwan News) — Taiwan’s central bank predicts moderate growth for 2023 as the country faces uncertainties in three aspects.
Taiwan may not attain the 3% growth goal for 2023 as global demand has weakened amid persistently higher inflation and rate hikes, which hurts the outlook of the country’s exports, according to the Directorate General of Budget, Accounting and Statistics (DGBAS).
DGBAS has estimated that Taiwan’s economy will grow at 2.75% this year, lower than previously expected, while the central bank has also lowered its GDP forecast to 2.53% growth.
Domestic demand will remain the main driver of growth but the global tightening of monetary policies and recessionary risks for many large economies are dampening Taiwan’s export prospects, the central bank suggested in a report.
The unpredictability of when the inflationary pressure worldwide will ease presents another uncertainty as Taiwan is continually affected by imported inflation. Factors include the Ukraine war, supply chain bottlenecks, trends in energy prices, climate change-induced agricultural shocks, and corporate spending in pursuit of a greener economy.
The extent to which deglobalization is being pushed also plays a role in the momentum of Taiwan’s economic growth and future investment. Geopolitical risks have prompted countries to bring home the manufacturing of critically important goods, which will lead to a massive restructuring of supply chains, said the report.