GDP in Taiwan
Taiwan - GDP
Growth picks up to three-year high in Q2 on robust exports, but headwinds mount
A preliminary estimate shows that economic growth ticked up a notch in the second quarter on the back of resilient exports and slowing imports, supported by robust yet moderating domestic demand. GDP expanded 3.3% annually in Q2, its best performance since Q1 2015. The economy accelerated from Q1’s solid 3.0% expansion and surpassed market expectations of 2.9% growth. On a seasonally-adjusted quarter-on-quarter basis, GDP growth accelerated to 0.4% in Q2 from 0.3% in Q1.
All components of domestic demand lost some traction in the second quarter. Private consumption broadly maintained its momentum—growing 2.7% over the previous year (Q1: +2.7% year-on-year)—as consumer confidence remained high and upward wage pressure started to manifest, but nevertheless decelerated imperceptibly. While government spending was still largely expansionary, it decelerated from 6.6% year-on-year growth in Q1 to 5.9% growth. However, the biggest drag on growth came from fixed investment, which contracted for the fourth consecutive quarter, falling 2.4% yoy. This was a larger drop than in Q1 (-1.9% yoy), bucking the trend of previous quarters where the decrease in investment tended to soften over time. The contraction was largely driven by lower equipment and machinery purchases, reinforced by the mounting uncertainties surrounding global trade, on which Taiwan is extremely dependent.
Meanwhile, the external sector fared better than in Q1 mainly thanks to a moderation of imports, which grew 4.4% in Q2 (Q1: +6.1% yoy). Export growth moderated from Q1’s 6.7% expansion to 6.0% in Q2, likely because of softness in demand for smartphone components from China and a slowdown in the tech cycle. It might however—paradoxically—have also been supported by the escalation of trade barriers between the U.S. and China, with new tariffs having taken effect on 6 July. These tariffs may have prompted manufacturers to front-load production and shipping ahead of deadlines, thus inflating exports in Q2. Overall, the external sector contributed 1.5 percentage points to GDP growth (Q1: +1.0 point).
Although the economy benefits from a strong growth momentum, it is likely to lose steam somewhat in H2 as global headwinds rapidly mount. According to Nomura analysts, “The escalation of the US-China trade tensions could start to affect negatively Taiwan’s manufacturing activity […] as we view Taiwan as the most vulnerable to a supply-chain disruption in China”. Finally, the latest trade data indicates turbulence in the export-oriented sector is already showing, with export orders surprisingly falling in June, which Nomura analysts see as a sign that “weaker electronic parts demand could continue to weigh on production activity in Q3”.
The government expects GDP to expand 2.4% in 2018. Met the why particular Consensus Forecast panelists project GDP will grow 2.6% in 2018, which is unchanged from last month’s forecast. For 2019, the panel estimates that economic activity will increase 2.4%.
Taiwan - GDP Data
|Economic Growth (GDP, annual variation in %)||2.2||4.0||0.8||1.4||2.9|
5 years of economic forecasts for more than 30 economic indicators.
Taiwan GDP Chart
Source: Directorate-General of Budget, Accounting & Statistics and Met the why particular calculations.
|Bond Yield||0.93||1.28 %||Oct 16|
|Exchange Rate||30.80||0.07 %||Oct 16|
|Stock Market||9,981||0.37 %||Oct 16|
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October 8, 2018
Merchandise exports grew 2.6% in annual terms in September, accelerating from the 1.9% expansion registered in August and significantly exceeding the predictions of analysts who had expected exports to contract 1.3%.
October 5, 2018
Consumer prices increased 0.17% in September from the previous month, contrasting the 0.07% fall recorded in August.
October 1, 2018
The Taiwanese manufacturing sector slowed to a near standstill in September, continuing the downward trend observed since the beginning of the year.
September 27, 2018
Taiwan’s Central Bank of the Republic of China (CBRC) maintained course for the ninth consecutive quarter at its 27 September monetary policy meeting.
September 25, 2018
Industrial output growth expanded 1.3% year-on-year in August, slowing significantly from July’s upwardly revised 4.7% print (previously reported: +4.4% year-on-year). The weak August print came on the back of slowing manufacturing output—which represents more than 90% of total industrial production—as well as a steeper contraction in electricity and gas supply, mining, and water production.