TAIPEI (Reuters) – Taiwan’s economic growth in the first quarter is expected to have slowed to its weakest in nearly four years, a Reuters poll showed, as the impact of the coronavirus health crisis hits its key electronics exports, a Reuters poll showed.
The government has repeatedly warned of uncertainty for the economy, saying growth momentum for its export orders would slow in the coming months due to the fallout from the pandemic. Taiwan’s tech manufacturers play a key role in the global supply chain for electronics and its export orders are a gauge of worldwide demand for the sector.
Gross domestic product probably expanded 1.6% in January-March compared with a year earlier, the poll of 16 economists predicted, the slowest pace since the first quarter of 2016. That would be down from 3.31% in the fourth quarter.
Taiwan has not gone into total lockdown to contain the spread of the virus, as early measures prevented a rapid spread of the flu-like respiratory disease. It has reported 429 infections and six deaths, lower than most of its neighbours.
Some analysts, however, are bearish on the island’s growth prospects, saying its success at containing the pandemic will not help avert a recession.
“Even though Taiwan has managed to avoid the economically-damaging lockdowns, this will not stop a sharp slump in the economy,” Capital Economics analyst Gareth Leather wrote.
He forecast that Taiwan’s domestic consumption and job market would be hard hit by a collapse in global demand.
“We think the economy will shrink by 5% this year, which would be by far the biggest contraction on record.”
Earlier this month, Taiwan downgraded its economic growth forecast for this year to between 1.3% and 1.8%, from a February forecast of 2.37%, citing the impact of the coronavirus outbreak.
The economy grew 2.71% in 2019.
In a sign of slowing demand for Taiwan’s electronic gadgets, the government expects April export orders to fall between 6.3% and 10.3% from a year earlier.
While Taiwan’s job market remained stable in March, the government is rolling out an economic stimulus package totalled T$1.05 trillion ($35.01 billion), which includes a T$30,000 wage subsidy for workers whose income was affected and interest-free personal mortgage of up to T$100,000.
Taiwan’s largest carrier, China Airlines <2610.TW>, this month announced a three-month pay cut of 15% to 25% for all employees starting from May, to help it reduce costs as the coronavirus pandemic batters the aviation industry.
Preliminary first quarter figures will be released on Thursday. Revised figures, including details and government forecasts, will be published about three weeks later
(Poll compiled by Carol Lee; Reporting by Yimou Lee; Editing by Jacqueline Wong)