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DGBAS drops '12 economic growth forecast to 1.05%

The Directorate-General of Budget, Accounting and Statistics (主計總處, DGBAS) yesterday slashed its 2012 economic growth forecast by 0.61 percent to 1.05 percent, citing low export numbers and declining domestic consumption.

The forecast for next year was also downgraded, lowered from 3.67 percent to 3.09 percent as a result of the same factors.

Estimated economic growth for the third quarter was dropped to 1.02 percent from 1.99 percent, while the fourth-quarter growth forecast was lowered to 2.83 percent from 4.23 percent.

Senior DGBAS official Jasmine Mei (梅家瑗) said that the phrases “anemic growth” and “tepid recovery,” used by the World Bank and IMF respectively, are the best terms for describing the current local economic conditions.

DGBAS Section Chief Joshua Gau (高志祥) explained that domestic consumption was dragged down by a weaker labor market, the pension scheme crisis and decreasing stock market trade volume.

The directorate's data show that reports of large-scale layoffs and unpaid leave have recently increased.

Furthermore, in the third quarter, trade volume of the Taiwan Stock Exchange decreased by 35.57 percent. The market value of stocks at the end of the third quarter fell by NT$2.1 trillion year-on-year.

As a result, the expected growth of domestic consumption in 2012 was downgraded from 1.58 percent to 0.88 percent, while the growth forecast for domestic consumption in 2013 was downgraded from 2.9 percent to 1.97 percent.

Gau said that global economic conditions have also deteriorated. Global Insight, a major economic advisory firm, lowered its global economic growth forecast from 2.6 to 2.5 percent in October, and the IMF also slashed its global trade volume estimates for 2012 and 2013 by 0.6 and 0.7 percent, respectively.

Gau added that in the fourth quarter, companies in the semiconductor industry will adjust their inventory levels, which will slow economic momentum further.

As a result, growth in exports of goods and services was adjusted by the DGBAS from 3.88 percent to 1.6 percent for 2012 and from 4.27 percent to 3.93 percent for 2013.

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