(Bloomberg) -- Taiwan cut its 2022 growth forecast for the third time this year as the global demand slowdown and rising geopolitical tensions with China prove tough to navigate.
Gross domestic product is likely to grow 3.06% for the year, the Cabinet’s statistics department said in a statement Tuesday. That’s lower than the last formal estimate of 3.76% given in August. The official 2023 GDP forecast was downgraded to 2.75% from 3.05%.
Authorities cited a downturn in exports through the rest of this year and next as contributing factors.
“Economic growth is expected to be relatively low in the first half of 2023,” said Tsai Yu-tai, the department’s head of statistics.
Chu Tzer-ming, the Cabinet’s chief statistician, added that growth would “gradually pick up” after the second quarter.
Export growth for 2022 is projected at around 8.7%, lower than an earlier forecast of about 13.5% as global inflation, interest rates and China’s Covid Zero policy curb demand. The government said 2023 exports are expected to contract slightly.
Officials left their full-year forecast for inflation little changed at 2.94%. It’s still the highest projection since the global financial crisis in 2008, when inflation surpassed 3.5%.
The government also revised GDP growth for the third quarter of 2022 to 4.01% from an earlier estimate of 4.1%.
Taiwan’s growth has been challenging this year. The economy is expected to expand at roughly half the rate it did last year, when booming demand for electronics and semiconductors boosted GDP.
Trade has fallen off in recent months, with exports contracting for the second consecutive month in October as the global slowdown intensifies -- a trend seen elsewhere in the region, including in South Korea’s dismal trade figures.
Taiwan weathered the downturn relatively well for much of the year. Last month’s fall in overseas shipments wasn’t as bad as economists expected, with exports to the US, Japan and elsewhere offset waning demand from China.
The economy has also managed to confront other headwinds including inflation, which central bank Governor Yang Chin-long said Tuesday was effectively contained through interest rate hikes and other measures.
Even so, Taiwan likely won’t be able to avoid more substantial economic pain forever. Chinese demand is still under pressure as Covid Zero continues to dominate policy there. Taiwanese officials have warned that November is likely to record a drop in exports of between 5% and 8%.
--With assistance from Cindy Wang.
(Updates with additional remarks from government officials.)
©2022 Bloomberg L.P.