Taiwan's National Development Council (NDC) has projected a 1.5% GDP growth for 2023, in contrast to the International Monetary Fund's (IMF) more conservative forecast of 0.8%. This divergence was announced on Monday, with the NDC attributing their optimism to a rebound in year-on-year export growth from September, suggesting the completion of inventory adjustments and a potential Q4 exit from the year-long economic contraction.
Taiwan's outbound sales saw a 3.4% year-on-year increase in September, reaching $38.81 billion, breaking a one-year decline streak. Despite this, Taiwan's economy remained in contraction in August with its composite index, evaluated through a five-color economic performance system, stuck at 15 points in the "blue light" category indicating contraction.
NDC head Kung Ming-hsin expects the index to exceed 17 points in Q4, steering Taiwan out of contraction due to improving exports. The information technology industry is showing signs of recovery due to increased end-user demand and reduced inventories. Furthermore, the domestic service sector, underpinned by robust post-COVID-19 consumption, continues to support the local economy.
Kung criticized the IMF's downgrade, referencing their past underestimation of Taiwan's economic growth. This was exemplified by Taiwan's 3% GDP growth in 2020 against IMF’s negative forecast. Both the Directorate General of Budget, Accounting and Statistics (DGBAS) and the central bank have adjusted their GDP growth predictions for Taiwan in 2023 upward.
Despite acknowledging the swift growth of the local consumer prices index (CPI), Kung anticipates it will grow less than 2% in the long run. Taiwan's CPI rose 2.36% in the first nine months of this year, with DGBAS predicting a rise of 2.14% in 2023 before falling to 1.58% in 2024.
In other related news, Ukraine's Finance Minister Serhiy Marchenko highlighted the country's economic stability and projected a 4.7% GDP growth in his presentation to the G7 financial block on Monday. The IMF's positive assessment anticipates further GDP growth due to efforts towards macroeconomic stabilization and economic activity restoration. Alfred Kammer, the European Department Director at the IMF, confidently assures the progression of Ukraine’s $115B international support package over the next four years.
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