Taiwan’s economic growth, likely to fall below 2 percent in 2023, should return to at least 3 percent in 2024, National Development Council chief Kung Ming-hsin (龔明鑫) said Monday at a legislative hearing.
Appearing before the Legislative Yuan’s Economics Committee, Kung said that while economic growth will decline this year to an estimated 1.6 percent, it can rebound to 3 percent next year after inventories are drawn down and investment and orders return.
He attributed this year’s slowdown to the contracting of the end-user market, which has been hurt by rising interest rates, and a decline in Taiwan’s exports, which are down 10.5 percent in Taiwan dollar terms in the first eight months of 2023 from a year earlier.
Kung said renewed growth momentum could come from new technologies, such as AI, the return of international tourists to Taiwan, and improving private consumption.
There are four major factors, however, that could derail growth next year, Kung cautioned.
They are “the major economies’ monetary policy of high interest rates, a Chinese economy with weak export and domestic demand and a serious real estate problem, the ongoing Russia-Ukraine war that could affect energy prices, especially during winter, and commodity prices being affected by extreme climate events,” he said.
Prior to the legislative hearing, Kung said that while Taiwan’s economic monitoring indicators flashed their 10th consecutive “blue light,” indicating contraction, in August, they could improve one notch to “yellow-blue” in September because exports are starting to rebound.
The NDC uses a five-color system to gauge the country’s economic performance, with blue indicating economic contraction, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy, and red pointing to an overheated or booming economy.
Helped by the drawing down of inventories that has prompted new orders, the measure for “new orders” in the manufacturing purchasing managers’ index also surpassed 50 percent in September, which is a good sign, Kung said.
Source: Focus Taiwan