Taiwan economy forecast to shrink 2.12% this year

Taiwan economy forecast to shrink 2.12% this year

TAIPEI, Nov. 16 Kyodo


Taiwan’s economy will shrink by a record 2.12% this year due to the global recession that affected exports and the Sept. 11 suicide attacks in the United States that delayed recovery originally expected for the fourth quarter, the chief government statistician said Friday.

Lin Chuan, head of the Directorate General for Budget, Accounting and Statistics, said the economy contracted 4.21% in the July-September third quarter, far below the 2.45% contraction forecast in August.

The third quarter gross domestic product (GDP) contraction is just short of the worst-ever quarterly figure, which was registered in the first quarter of 1975 with a 4.26% contraction when the oil crisis caused a global slump.

Lin, who addressed a news conference after the quarterly meeting of economic experts, said the Sept. 11 attacks, which disrupted exports and undermined consumer confidence, had ruined prospects for a rebound to growth in the fourth quarter.

Instead of an originally projected 2.38% expansion, the economy will contract 2.68% in the fourth quarter. The island’s GDP rose 0.91% in the first quarter and contracted 2.35% in the second quarter this year.

Lin said GDP will start to expand in the first quarter next year and is expected to grow 2.23% in 2002.

The government figures are largely in line with forecasts made by independent economic researchers. Earlier in the day, a leading private think tank said the economy shrank by an all-time low 4.29% in the third quarter, mainly due to a sharp decline in exports, to hit rock-bottom.

The private Taiwan Economic Research Institute said in its latest forecast the fourth quarter will still see a slight contraction of 0.16%, but GDP will resume growth in the first quarter next year.

The institute forecasts the GDP this year will contract 1.49%, while GDP is estimated to expand 2.03% in 2002.

The Chung-hua Institution for Economic Research last month put the third-quarter contraction at 4.52% and predicted the economy would shrink 0.96% in the fourth quarter and 1.32% in the first quarter next year.

It predicted annual GDP growth will decline 1.76% this year, but grow 2.13% in 2002.

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