Export-reliant Taiwan raised its 2018 economic growth forecast on Friday for the third time this year, despite worries about global trade frictions and softening demand for its hi-tech gadgets. The statistics agency raised its full-year outlook to 2.69 percent from 2.60 percent forecast in May and 2.42 percent seen in February.
But it acknowledged global demand is starting to cool, and predicted the island's economic growth would slow to 2.36 percent in the third quarter. It projected full-year growth next year of 2.55 percent, in its first forecast for 2019.
Taiwan's exports in the second quarter were strong despite growing protectionist rhetoric, the Directorate General of Budget, Accounting and Statistics said after the data and forecasts were released. Gross domestic product (GDP) edged up 3.3 percent in the quarter from a year earlier, marginally better than a preliminary reading of 3.29 percent.
Analysts said the surprising resilience may be due to exporters which were rushing out shipments, or "front loading", ahead of feared tariff increases. That could result in weaker shipments in coming months. Analysts expect trade momentum in Asia to soften sooner or later if Washington and Beijing stick with tit-for-tat tariffs, disrupting global technology supply chains. While Beijing and Washington plan lower-level talks next week, neither side seems in the mood to compromise at this point.
Demand in China, Taiwan's biggest trading partner, is already cooling under the weight of rising borrowing costs and a crackdown on riskier lending. "We are not particularly optimistic about Taiwan trade as tensions between the US and China escalate," ING economist Iris Pang wrote in a note before Friday's data. The Taiwan government also forecast on Friday that exports would grow 6.39 percent in 2018, slightly higher than a previous forecast of 6.36 percent. That compared with a 13.2 percent expansion in 2017.