Published Date: 2021-06-21
Taiwan’s central
bank says that a number of factors could prevent rosy predictions of the
country’s economic growth from coming to pass. The bank’s statement on Monday
comes after Taiwan’s statistics agency predicted a growth rate of 5.46% for
2021.
On June 4, the
Directorate General of Budget, Accounting and Statistics raised its prediction
for annual GDP growth from 4.64% to 5.46%. It says it expects Taiwan’s economy
to benefit from a rise in global demand and a strong export performance in
industries such as electronics.
But Taiwan’s
central bank urged caution on Monday, saying that three factors could depress
economic activity in the country.
The first factor
is the ongoing outbreak of COVID-19. The statistics agency’s prediction is
based on the assumption that authorities can contain local infections by the
end of the third quarter. But if that does not happen, the bank warns that
consumer spending and the export-based economy could feel the effects.
The second factor
is how well industries that are driven by domestic demand are able to recover
from lockdown restrictions. That in turn will dictate employment figures and
wage growth.
Finally, the
central bank warns that water and electricity shortages could depress growth.
Taiwan is currently suffering its worst drought in decades, although recent
rains have provided some relief. And with schools and workplaces across the
country closed for a soft lockdown, domestic electricity usage and a thriving
industrial sector have helped set record levels of electricity consumption.