DGBAS revises GDP
growth down again
LIMITED MOMENTUM: A DGBAS official said the
economy has been in a state of ¡¥anemic growth,¡¦ while the Cabinet said it was
cautiously optimistic about next year
By Amy Su / Staff reporter
The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday
revised downward its GDP growth forecast for this year to 1.05 percent from the
1.66 percent it estimated last month, due to weaker-than-expected momentum in
the second half of the year.
It was the ninth straight time the agency has revised downward its forecast for
this year¡¦s GDP growth since August last year, when it forecast a 4.58 percent
growth rate.
The opposition reacted by saying that a Cabinet reshuffle was now a necessity.
¡§Despite the nation¡¦s GDP growth continuing an upturn trend, its growth momentum
is limited and lagging,¡¨ DGBAS section chief Jasmine Mei (±ö®aÞ¶) told a press
conference.
The economy has been in a stateof ¡§anemic growth¡¨ or ¡§tepid recovery,¡¨ Mei said,
echoing terms the IMF and the World Bank used earlier this year to describe
global economic conditions.
The downward revision came as the economy was expected to expand by 1.02 percent
in the third quarter year-on-year, lower than the 1.99 percent growth estimated
in August, and was expected to increase 2.83 percent in the fourth quarter, less
than the August forecast of 4.23 percent, DGBAS section chief Joshua Gau (°ª§Ó²»)
said, citing continuously slowing global economy and lower-than-expected growth
in domestic consumption.
The economy contracted by 0.18 percent in the second quarter from a year
earlier, DGBAS data showed.
As the government now projects the economy to grow by 2.83 percent in the fourth
quarter, it implies that the government may not be able to raise the minimum
monthly wage in the first half of next year, since the Cabinet said in September
the move could only take effect if GDP grows by more than 3 percent for two
quarters in a row, or the unemployment rate drops below 4 percent for two
consecutive months.
However, the DGBAS maintained its forecast of an annual increase of 1.93 percent
in the consumer price index (CPI) and that might be good news for Minister of
Economic Affairs Shih Yen-shiang (¬IÃC²»), who said in April that he would step
down from his post if the headline inflation rate moves above 2 percent this
year.
For next year, Gau said GDP may expand by 3.09 percent, down from the 3.67
percent growth previously forecast by DGBAS, while the CPI is expected to
increase 1.25 percent.
Executive Yuan spokesperson Cheng Li-wun (¾GÄR¤å) said the Cabinet remains cautious
in its optimism about the overall economic outlook next year.
The issue was brought up in a regular policy discussion meeting at the Cabinet
after the DGBAS reduced its forecast, Cheng said.
During the discussion, Minister Without Portfolio Kuan Chung-ming (ºÞ¤¤¶{)
suggested the DGBAS review the possibility of calculating GDP on a quarterly
basis, which she said was ¡§a more professional way¡¨ to assess economic
performance, rather than on an annual basis, as is currently done, Cheng said.
Because the economy is recovering gradually, quarter-on-quarter GDP would better
reflect the recovery than year-on-year GDP, she said.
Howwever, the Democratic Progressive Party called for a Cabinet reshuffle.
¡§The ninth straight cut showed that Ma¡¦s pledge of an improving economy within a
month has failed and Taiwan¡¦s economy is going in a downward spiral,¡¨ DPP
spokesperson Lin Chun-hsien (ªL«T¾Ë) said.
The Cabinet¡¦s ¡§Economic Power-up Plan¡¨ is not working, as GDP growth ranked last
among the Four Asian Tigers and the nation has the highest unemployment rate for
the four, DPP Chairman Su Tseng-chang (Ĭs©÷) said at the party¡¦s Central Standing
Committee meeting.
Sydney-based Moody¡¦s Analytics associate economist Katrina Ell said in a note
that the disappointing growth in the third quarter indicated exports and
production had improved, but remain weak, keeping domestic demand soft.
Tony Phoo (²Å»Ê°]), a Taipei-based economist at Standard Chartered Bank, said the
latest data should provide comfort to monetary policymakers that the economiy
has bottomed out in the first half of this year and is likely to stage a modest
rebound into the first half of next year. He added that the central bank might
keep the policy rate unchanged at 1.875 percent during next board meeting
scheduled for next month, considering the high inflation is expected.
Additional reporting by Shih Hsiu-chuan and Chris Wang
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