Taiwan revises up 2022 GDP forecast on strong export outlook

TAIPEI (Reuters) – Taiwan’s economy is likely to grow at a faster pace this year that initially forecast, the statistics office said on Thursday, upgrading its outlook on an expected strong performance in exports bolstered by chip demand.

The revision came as the statistics office raised its export growth forecast for this year, with global demand for the island’s technology products buoyed by 5G, electric vehicles and high end computing.

Gross domestic product (GDP) is expected to rise 4.42% this year, the Directorate General of Budget, Accounting and Statistics said, up from 4.15% growth forecast in November.

However, that will be a slower pace than the 6.45% logged for 2021, which was the fastest rate in over a decade since it expanded 10.25% in 2010.

The directorate said the economic global impact of COVID-19 was gradually dissipating, with continued strong demand for semiconductors, the main plank of Taiwan’s economy.

It foresaw exports this year rising 9.69%, from 6.14% predicted before.

The government is watching the impact of the war in Ukraine.

Deputy Minister of Economic Affairs Chen Chern-chyi said he expected the impact of the conflict on Taiwan to be “controllable”, but that they were keeping an eye on supply chains and in close touch with companies.

Cabinet spokesman Lo Ping-cheng added that Taiwan’s economic fundamentals remained good, but the government will “extend a hand” if there are any “irrational” movements in the currency and stock markets.

Taiwan’s benchmark stock index closed down 2.6% on Thursday.

Taiwan’s exports are a bellwether of demand for global tech giants such as Apple Inc, as the island is a major producer of semiconductors, a global shortage of which has rattled firms like auto makers and boosted Taiwanese corporate profits.

In the fourth quarter, GDP expanded by a revised 4.86% from a year earlier, slightly down from a preliminary reading of 4.88%, the agency added.

Another risk is the slowdown in the economy of China, Taiwan’s top trading partner.

China’s economy grew 8.1% in 2021 and 4.0% in the final quarter, faster than expected but still its weakest pace since the second quarter of 2020, off the back of weak consumption and a property downturn.

China will announce its goal for this year’s economic growth next Saturday when Premier Li Keqiang opens the annual meeting of parliament in Beijing.

(Reporting by Jeanny Kao and Ben Blanchard; Editing by Raissa Kasolowsky and Kim Coghill)