TAIPEI -- Taiwan downgraded its economic outlook for 2019 on Wednesday due to sluggish exports, projecting 2.27% growth in real gross domestic product for the island's slowest uptick in three years.
The forecast from the Executive Yuan falls 0.14 percentage point lower than a projection issued in November. Taiwan achieved 2.63% growth in 2018, and the island's potential growth rate is thought to be just below 3%.
Information-technology-related exports, a key driver of the economy, look poised to languish as a result of lackluster smartphone sales in mainland China and fallout from the trade war. Goods exports are forecast to edge up 0.19% this year, compared with a roughly 6% increase last year.
Capital investment and consumption are on track to take a bigger hit than expected.
Business inventories started rising noticeably in the second half of 2018. But, according to an official from a major semiconductor company, "piled-up inventories will be reduced to normal levels in mid-2019."
Taiwan's government expects that exports will regain momentum in the second half of 2019. But the potential for difficulties in U.S.-China trade talks makes a further slowdown possible.
The Taiwan Institute of Economic Research projects a more conservative rate of real GDP growth at 2.12%.
"Companies are losing investment appetite, and this will hamper the economy," said Gordon Sun at the think tank. "Pessimistic views are becoming widespread. It will take a long time for businesses to regain confidence in the economy."