DGBAS revises 2023 GDP forecast down to almost eight-year low of 2.12%

DGBAS revises 2023 GDP forecast down to almost eight-year low of 2.12%

2023-02-23

Despite post-COVID recovery, the global economy is struggling due in part to inflationary pressure. In view of the downturn, the Executive Yuan has revised Taiwan’s 2023 GDP growth forecast down to an almost eight-year low. Experts say the manufacturing sector will be hit hard, but other sectors such as tourism and retail are predicted to improve. Let’s hear more on this year’s economic forecast.

American computer memory producer Micron Technology is laying off employees worldwide, and Taiwan is no exception. Now, not just Micron, but leading footwear manufacturer Pou Chen Corporation is also reducing its workforce. Many companies have begun mass layoffs -- a bad omen for the economy.

Chu Tzer-min
DGBAS minister
Certainty of a global economic downturn has increased. Corporate capital expenditure in the short term is taking a more prudent direction. Coupled with last year’s base already being high, the forecast for this year’s private investment is a negative growth of 1.13%. The forecast for this year’s economic growth rate is 2.12%.

The Executive Yuan’s Directorate General of Budget, Accounting and Statistics has revised this year’s GDP forecast down to a near eight-year low. That’s amid weak demand for exports, which have been in constant decline. The electronics industry has been hit hardest, and many manufacturers and semiconductor companies are still clearing inventories. With persistent inflationary pressure, officials say going over the 2% inflation target set by the central bank has become the norm.

Chu Tzer-min
DGBAS minister
Last year, inflation was 2.9% or so, close to 3%. In this year’s forecast we’re near 2.16%, so there’s a downward trend, but we still have the pressure of rising prices.

Although post-pandemic recovery and strong domestic demand have maintained momentum for growth, these factors cannot alter the reality of an overall economic recession.

Wang Chien-chuan
Chung-hwa Institution for Economic Research
Times are changing. In the past, the manufacturing industry was good, but now it has too much inventory. That’s because before, purchases were high. They had to prepare materials and spare parts. So it will be revised downward this year, and that will lengthen its recovery time. But now, since countries are opening up, the hospitality, food and beverage, tourism, and retail sectors will all improve. That’s another piece of better news.

With the economy upended, even experts are finding it hard to make predictions. Factors causing fluctuation are numerous, inflation may not fall, and interest rates may continue to rise. It could be a while before we see the return of a healthy economy.