Taiwan cuts 2023 economic growth forecast by wee bit, but AI, foldable phones and Indian market offer support

World tech hub’s economy has had a tough go since last year, on weak demand for its exports, but ‘optimistic forecast’ projects end-of-year recovery

Taiwan also trimmed its annual GDP growth forecast in February, then fell into a technical recession that has heaped further pressure on the island’s economy

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Taiwan now expects its gross domestic product (GDP) to increase by 2.04 per cent this year. Photo: EPA

Published: 7:00pm, 26 May 2023

In the midst of a recession, Taiwan has revised down its 2023 economic growth forecast by a smidgen due to sagging global demand for its hi-tech goods, but analysts expect to see a rebound toward the end of this year.

The Directorate-General of Budget, Accounting and Statistics said on Friday that the island’s gross domestic product (GDP) would firm by 2.04 per cent this year over 2022. In February, it had forecast 2.12 per cent growth.

Global inflation, interest rate hikes, and “soft” end-user demand have met with supply-chain chokepoints to “restrain” foreign trade with Taiwan, the directorate-general said.

Taiwan fell into recession in the first three months of 2023.

Declining sales of smartphones and PCs across the globe have cramped shipments of electronic devices and their parts, including the island’s world-leading semiconductors. Telework and home-study trends during the pandemic sparked a run on those devices in major markets such as Europe and the US.

“They’re in a technical recession, exports are really poor, and I can’t see how that’s going to turn quickly,” said Alicia Garcia Herrero, Asia-Pacific chief economist with Natixis Corporate & Investment Banking in Hong Kong. “The main reason is the semiconductor cycle.”