Credit: REUTERS/TYRONE SIUBy Jeanny Kao
TAIPEI, May 24 (Reuters) - Taiwan lowered its 2019 economic growth forecast on Friday, as sluggish global tech demand dragged on the island's export-reliant economy, adding to pressures from a protracted Sino-U.S. trade war.
The government cut its estimate for full-year 2019 growth for the third time, to 2.19% from 2.27% forecast in February.
It also forecast that exports would decline 1.17% in 2019, down from a 0.19% expansion forecast in February. Exports grew 5.9% in 2018.
Taiwan's factories play a major role in the global tech supply chain, and the island's weaker growth outlook suggests electronics demand will remain soft for some time.
Tzer-Ming Chu, Minister of the Directorate-General of Budget, Accounting and Statistics, attributed the revision in GDP to a slowing global economy but expected stronger growth in the coming quarters in 2019. He did not elaborate.
"The reason for the negative revision on exports is due to decreasing global trade and a slowing global economy. It's not necessarily related to the trade war," Chu told a news conference.
Taiwan's GDP outlook was lowered previously from 2.41% in November and 2.55% in August.
The island's first quarter annual GDP growth was also revised slightly lower to 1.71% from a preliminary 1.72%, its slowest pace in more than two years.
DBS economist Ma Tieying said in a note prior to Friday's data that Taiwan's trade conditions could deteriorate further due to the latest escalation in tensions between the United States and China.
"Given these new developments, it has become uncertain whether 1Q is the bottom of Taiwan's current cycle," she said.
The government also nudged down its inflation estimate for 2019 to 0.71% from 0.73% previously.
The prolonged downturn in global tech demand has hit profits for Taiwan's many technology manufacturers this year.
Foxconn 2317.TW, the world's largest contract manufacturer, reported a bigger fall in quarterly profit than analysts had expected, amid waning demand for electronics from its key customers.
(Additional reporting by Yimou Lee and Taipei newsroom; Editing by Jacqueline Wong)
((yimou.lee@thomsonreuters.com; +886-909-894-919; Reuters Messaging: yimou.lee.reuters.com@reuters.net / Twitter: https://twitter.com/YimouLee))
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