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.