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Taiwan cuts 2020 GDP outlook again, but sees recovery ahead
[TAIPEI] Taiwan's economic growth will likely slow to its weakest in five years in 2020 as consumption and tourism take a hit from the coronavirus pandemic, but the economy is set to rebound next year on improved demand for the island's exports.
Taiwan's economy, a key part of the global technology supply chain, is expected to grow 1.56 per cent this year, the Directorate General of Budget, Accounting and Statistics said on Friday, again downgrading its outlook.
In May, it forecast full-year growth of 1.67 per cent, its lowest since 2015.
Gross domestic product (GDP) shrank by a revised 0.58 per cent in the second quarter from a year earlier, slightly up on the preliminary decline of 0.73 per cent, the agency said.
The agency projected full-year growth of 3.92 per cent next year, its fastest pace since 2014, citing a "significant recovery" in external demand and manufacturers moving production home from China amid a supply chain reshuffle following Sino-US tensions and the pandemic.
The agency said the pandemic has hit the island's consumption, especially the services sector and tourism, but still-strong global demand for electronics helped offset some of the impact, thanks to the growing need for telecommuting as more people work from home to reduce the risk of infections.
Consumption dropped 4.98 per cent in the second quarter from a year earlier at its sharpest rate on record.
While Taiwan has not gone into total lockdown to contain the virus due to relatively successful measures that prevented its rapid spread, the government has repeatedly warned of uncertainty for the economy and is rolling out a stimulus package worth US$35.79 billion.
In addition to the virus uncertainty, analysts say renewed US-China tensions could spell extra trouble for Taiwan's electronics exports, a bellwether of demand for global tech giants such as Apple.
The statistics agency forecast exports in 2020 would drop 0.1 per cent, but recover sharply next year to expand 6.7 per cent.