Taiwan Q1 preliminary GDP grows faster than expected
2022.04.28 11:52
FILE PHOTO: People wearing face masks to prevent the spread of the coronavirus disease (COVID-19) and carrying umbrellas walk on the street during a rainy day in Taipei, Taiwan, November 26, 2021. REUTERS/Annabelle Chih
By Jeanny Kao and Yimou Lee
TAIPEI (Reuters) -Taiwan’s economy grew at a slower pace in the first quarter compared with the previous three months but still performed better than expected, supported by strong tech exports and global demand for chips but affected by weaker consumer confidence.
For the January-March period, annual gross domestic product (GDP) growth was put at 3.06%, compared with 4.86% for the previous quarter, preliminary data from the statistics agency showed on Thursday.
That was above an increase of 2.9% forecast in a Reuters poll, but was the slowest growth since the second quarter of 2020, when the economy grew 0.63% year-on-year.
As a key hub in the global technology supply chain for giants such as Apple Inc (NASDAQ:AAPL), Taiwan’s economy has outperformed many regional peers during the COVID-19 pandemic, benefiting from robust demand for tech exports as more people have turned to working and studying from home.
A global shortage of semiconductors has also filled Taiwan chip makers’ order books and driven them to expand production at home.
Taiwan’s exports rose 29.4% in 2021, and the economy continues to benefit from strong global demand for its high-tech goods and chips.
Total first-quarter exports soared 23.5% from a year earlier in U.S. dollar terms, the agency said.
It attributed the quarterly GDP growth to stronger-than-expected exports, driven by continued international demand for the island’s tech products including semiconductors.
A recovery in domestic consumption amid the relaxation of COVID-19 rules was offset by inflation, and consumption only grew marginally in the quarter, it added.
Kevin Wang, an economist at Taishin Securities Investment Advisory Co, said second quarter domestic demand may remain weak due to a recent spike in COVID-19 cases, but he was sticking to a 4.2% growth forecast for the quarter.
“As for exports, we need to watch whether U.S. consumer strength has been reduced due to worsening inflation, and whether the impact of China’s lockdown measures in response to the epidemic on the supply chain and production has expanded,” he said.
China’s economy grew a faster-than-expected 4.8% year-on-year in the first quarter, but a risk of a sharp slowdown over coming months has risen as sweeping COVID-19 curbs, especially in Shanghai, and the Ukraine war disrupt production and weaken demand.
Taiwan will release revised GDP figures next month, including full-year growth forecasts for 2022.
