TAIPEI (Taiwan News) — The economy will grow by 2.04% in 2023 instead of by 2.12% as predicted earlier, the government said Friday (May 26).

Taiwan has been hoping to keep gross domestic product (GDP) growth above 2% for the year, but falling exports and a worse-than-expected investment performance have led to cuts in forecasts by major think tanks.

On Friday, the Cabinet’s Directorate General of Budget, Accounting and Statistics (DGBAS) said growth in 2023 would fall to its lowest level in eight years after GDP shrunk by 2.87% during the first quarter. Global demand is still taking a beating due to the war in Ukraine, inflation, and interest rate hikes, the Liberty Times reported.

As to private investment, sectors including green energy, semiconductors, and airlines are continuing to expand amid a post-COVID recovery. However, other parts of the economy have to cope with excess stocks, forcing them to cut the pace of production and be more careful about spending.

As a result, private investment is likely to shrink by 2.49% this year, or 1.36% more than expected, the DGBAS said. In contrast, private consumption would surge by 6.92%, 1.68% more than forecast earlier, and inflation for the year would reach 2.26%, 0.1% higher than previous predictions by the DGBAS.