Taiwan's 2012 GDP Growth Forecast Lowered

The Taipei Times reports that the The Directorate-General of Budget, Accounting and Statistics (DGBAS) has lowered the forecast for GDP growth from 3.38% to 3.03%. The reason for this is lower exports in H1 this year. As per the article, "Moody’s Analytics said electronics were the economy’s weak link." The article continues:

It was the sixth straight time DGBAS has revised downward its forecast for this year’s GDP growth since August last year, when the agency forecast a 4.58 percent growth rate for this year.

“Exports fell more than expected in the first half of the year, which is the major factor making us revise downward our full-year economic growth forecast,” DGBAS section chief Joshua Gau (高志祥) told a press conference.

Exports dropped 4 percent in the first quarter from a year earlier, a phenomenon rarely seen, Gau said.

Previous drops in quarterly exports only happened during the Asian financial crisis that began in 1997, the dot-com bubble in 2000 and the global financial crisis that began in 2008.

Full-year exports are expected to grow 2.69 percent to US$316.5 billion this year, with exports in the second quarter continuing to post a 2.55 percent year-on-year decline, DGBAS statistics showed.

This is not totally unexpected. There is hope that exports will recover in H2 this year but my personal opinion is that most of the drivers of growth for Taiwanese exports are beyond the influence of the government. The global economy is weakening: the ongoing fiasco in Europe and the slow down in China's economic growth all point to a tougher global market place in which to sell electronics. Of course the government is still hopeful that growth can (and will be) achieved, but I don't think there is going to be any drastic upward adjustments in the global economy for a while to come. The Greek/Europe fiasco (despite what people are saying) needs to play itself out: will Greece stay in the Euro or not, and since it seems increasingly likely that they will leave, the impact of a Greek exit from the Euro needs to be fully absorbed. What then happens to Spain, Ireland, Portugal and Italy? The global economy is in for a long haul!  Further downward adjustments in the GDP forecast for 2012 wouldn't be completely unexpected.