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Standard Chartered Bank cuts Taiwan GDP growth forecast to below 2%


03/03/2020 05:00 PM


Taipei, March 3 (CNA) Standard Chartered Bank, a leading British banking group, said it has lowered its forecast for Taiwan's gross domestic product (GDP) for 2020 to below 2 percent, taking into account the impact of the spread of the COVID-19 coronavirus originally from the Chinese city of Wuhan.

In a news conference, Standard Chartered announced that it expects Taiwan's GDP will grow 1.9 percent in 2020, a downgrade from its previous forecast of 2.2 percent made Feb. 19.

The latest forecast by Standard Chartered showed the bank has been downbeat about Taiwan's economic growth, compared with Taiwanese government figures. On Feb. 12, the Directorate General of Budget, Accounting and Statistics (DGBAS) lowered its forecast for Taiwan's GDP growth for 2020 to 2.37 percent from 2.72 percent.

Tony Phoo (符銘財), a senior economist at Standard Chartered Bank for East Asia, said the downgrade of Taiwan's GDP growth forecast by his bank largely reflects concerns that production in China will shrink in the wake of the corornavirus spread.

After the virus broke out at the end of December, there have been more than 90,000 confirmed cases reported worldwide, with over 3,000 deaths, the majority of which have been in China.

China has stepped up measures to lock down about 50 cities around the country to contain the spread of the virus.

The measures include the residents of communities having to register before they are allowed in or out and heavier restrictions that shut down highways, railways and public transport systems, which has limited people and cargo movement and has hindered production.

Phoo said Taiwan's manufacturing sector has been highly correlated with its Chinese counterpart, citing data showing that China accounted for 23 percent of Taiwan's semi-finished goods production in 2018.

The equity market has feared that the virus spread in China will interrupt a supply chain for Taiwanese electronics manufacturers and in turn affect Taiwan's production and shipments.

In addition, Phoo said Taiwan is expected to feel the pinch resulting from the losses in the tourism industry as the country has barred entry by Chinese tourists due to the virus infection concerns.

According to Phoo, 27 percent of foreign arrivals in Taiwan came from China in 2019.

Phoo said Taiwan's GDP for the first quarter of this year will be affected by the COVID-19 contagion. But Standard Chartered did not give details about the GDP growth from quarter-to-quarter in Taiwan.

Chartered Bank said Taiwan is still expected to outperform its neighboring countries. For example, the bank has forecast that South Korea, one of Taiwan's closest competitors, is expected see its economy grow 1.8 percent in 2020.

The bank said Hong Kong could see contraction of 2.4 percent in 2020, while Singapore's economy is expected to grow only 0.8 percent.

As for China, the bank predicted that the epidemic in China could be eased at the end of March, and after a slow first quarter, the country's economy is expected to bounce back in the second and third quarter.

The bank added the China economy is expected to gain support from the Chinese government's stimulus measures which could maintain private consumption, while production is expected to stage a V-shape rebound after the first quarter.

Standard Chartered has cut its forecast of China's 2020 GDP growth by 0.3 percentage points from its previous estimate to 5.5 percent. It was the second downgrade of China's GDP growth so far this year.

The bank has also lowered its forecast of the global economic growth to 3 percent for 2020 from 3.2 percent.

(By Wu Chia-jung and Frances Huang)

 

Link, https://focustaiwan.tw/business/202003030010

 


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