Economic growth in the first quarter came in at a disappointing 1.54 percent, weighed down by sluggish exports and private consumption, government data showed yesterday.
The figure was barely half of the 3.26 percent growth estimated by the Directorate-General of Budget, Accounting and Statistics (DGBAS) in February.
“Weaker-than-expected global economic sentiment in the first quarter dragged down [Taiwan’s] export momentum,” DGBAS senior executive officer Jasmine Mei (梅家瑗) told a press conference.
The slowdown in China and the EU affected Taiwan’s exports of information and communications technology products during the January-to-March period, Mei said.
Exports rose 2.4 percent year-on-year in the first three months, far behind the 4.71 percent growth rate forecast by the government in February, the DGBAS said.
Stagnant wages also led to sluggish private consumption, which rose only 0.35 percent from the previous year and lagged behind the 1.57 percent forecast by the DGBAS.
The slower increase in private consumption shaved 0.69 percentage points from the agency’s GDP growth forecast.
Meanwhile, fixed-capital formation maintained its momentum, climbing 10.64 percent in the first quarter from a year earlier and outpacing the government’s forecast of 5.63 percent growth.
The DGBAS attributed the increase to strong capital expenditure by semiconductor companies.
Council for Economic Planning and Development Minister Kuan Chung-ming (管中閩) said he was surprised by the low private consumption number.
Earlier this year, Kuan said the council was aiming for economic growth of more than 4 percent this year.
However, to reach that number, GDP growth in the remaining quarters will have to be higher than 5 percent, which is unlikely, he said yesterday.
Still, the rise in private investment was an indication that companies were positive about the economic outlook, he said.
The DGBAS maintained its full-year growth forecast at 3.59 percent, but said it would release an economic update on May 24.
Credit Suisse AG yesterday cut its full-year growth forecast for Taiwan to 2.7 percent from its prior estimate of 3.4 percent.
“We think the recent weakness in export order flows suggests that export growth could continue to stay moderate in the second quarter,” Credit Suisse economist Christiaan Tuntono said in a research note.
Tuntono said he expected the DGBAS and other market watchers to revise downward their full-year growth forecasts soon.
With the downside risk on growth rising, there is a chance that the central bank would cut the rediscount rate this year, if global demand further disappoints, Tuntono said.
National Central University professor Dachrahn Wu (吳大任) was more optimistic, saying the nation could still see more than 3 percent GDP growth this year, on the back of expectations that exports would improve along with a steady economic recovery in the US and Europe in the remaining quarters.
Additional reporting by Camaron Kao