(Recasts, adds details)
* 2020 GDP estimate cut to +1.56%, vs previous forecast +1.67%
* 2021 growth seen at +3.92%
* Q2 y/y growth revised up to -0.58%, from -0.73%
* Strong recovery expected in 2021 - stats office
TAIPEI, Aug 14 (Reuters) - Taiwan’s economic growth will likely slow to its weakest in five years in 2020 as consumption and tourism take a hit from the coronavirus pandemic, but the economy is set to rebound next year on improved demand for the island’s exports.
Taiwan’s economy, a key part of the global technology supply chain, is expected to grow 1.56% this year, the Directorate General of Budget, Accounting and Statistics said on Friday, again downgrading its outlook.
In May, it forecast full-year growth of 1.67%, its lowest since 2015.
Gross domestic product (GDP) shrank by a revised 0.58% in the second quarter from a year earlier, slightly up on the preliminary decline of 0.73%, the agency said.
The agency projected full-year growth of 3.92% next year, its fastest pace since 2014, citing a “significant recovery” in external demand and manufacturers moving production home from China amid a supply chain reshuffle following Sino-U.S. tensions and the pandemic.
The agency said the pandemic has hit the island’s consumption, especially the services sector and tourism, but still-strong global demand for electronics helped offset some of the impact, thanks to the growing need for telecommuting as more people work from home to reduce the risk of infections.
Consumption dropped 4.98% in the second quarter from a year earlier at its sharpest rate on record.
While Taiwan has not gone into total lockdown to contain the virus due to relatively successful measures that prevented its rapid spread, the government has repeatedly warned of uncertainty for the economy and is rolling out a stimulus package worth T$1.05 trillion ($35.79 billion).
In addition to the virus uncertainty, analysts say renewed U.S.-China tensions could spell extra trouble for Taiwan’s electronics exports, a bellwether of demand for global tech giants such as Apple.
The statistics agency forecast exports in 2020 would drop 0.1%, but recover sharply next year to expand 6.7%.
It also slightly raised its consumer price estimate for 2020 to a drop of 0.19% from a 0.32% fall previously. ($1 = 29.3380 Taiwan dollars) (Additional reporting by Ben Blanchard; Editing by Jacqueline Wong)
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