Taiwan revises down 2015 growth outlook on China, Europe concerns

By Jeanny Kao and J.R. Wu

TAIPEI (Reuters) - Taiwan on Friday trimmed its forecasts for exports and economic growth for next year as major trading partners China and Europe both face significant headwinds.

The government now projects exports to grow 3.56 percent in 2015, instead of the earlier-forecast 4.09 percent. It tweaked the 2015 GDP growth projection to 3.50 percent from 3.51 percent while raising this year's one to 3.43 percent from 3.41 percent.

The reduced forecast for exports could raise concern about where demand for Taiwan's top-notch technology goods will come from once the frenzied demand for Apple Inc's newest smartphones cycle down.

"Next year China and the European Union will see below-par growth," Joshua Gau, a section chief in the Directorate-General of Budget, Accounting and Statistics, told reporters. "This is the main reason for the downward revisions."

Taiwanese companies produce components that make up the bulk of Apple's iPhones, from the semiconductors to the camera lenses and home buttons to the casings.

Taiwan's export orders, an indication of global tech demand, are set to reach a record this year, the economics ministry said last week, estimating the total at around $480 billion (306 billion pounds).

'SIGNIFICANT DECOUPLING'

But export orders track goods made by Taiwan-owned factories both on the island and overseas, while exports only measure goods shipped from Taiwan itself.

"There's been a significant decoupling of export orders from actual exports," said KGI Securities economist Andrew Tsai. "If we're just looking at electronics products, about 90 percent is manufactured abroad."

The statistics agency also amended its forecast for inflation in 2015, now putting the increase in the consumer price index at 0.91 percent instead of 1.46 percent.

Taiwan's government has been calling for more trade with China, the island's largest trading partner, particularly after the mainland and South Korea this month said they had reached in-principle agreement on a free trade agreement (FTA).

The worry for the island's policymakers is that South Korea and Taiwan are export competitors. An agreement between Taiwan and China on trade in services has been held up in Taiwan's parliament since March, after a massive protest blocked its ratification.

A senior Chinese official on Wednesday said an FTA with Seoul presents a challenge for Taipei and warned that Taiwan would not enjoy the same treatment as South Korea in the China market without ratification of the cross-strait services pact.

(Additional reporting by Michael Gold; Editing by Richard Borsuk)