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.
Photo: Mandy Cheng, AFP
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
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
UNIFYING OPPOSITION: Numerous companies have registered complaints over the potential levies, bringing together rival automakers in voicing their reservations US President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’ standing in the global trading system by penalizing purchases from abroad. Administration officials could release details of Trump’s planned 50 percent duty on copper in the days before they are set to take effect on Friday next week, a person familiar with the matter said. That is the same date Trump’s “reciprocal” levies on products from more than 100 nations are slated to begin. Trump on Tuesday said that he is likely to impose tariffs
HELPING HAND: Approving the sale of H20s could give China the edge it needs to capture market share and become the global standard, a US representative said The US President Donald Trump administration’s decision allowing Nvidia Corp to resume shipments of its H20 artificial intelligence (AI) chips to China risks bolstering Beijing’s military capabilities and expanding its capacity to compete with the US, the head of the US House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party said. “The H20, which is a cost-effective and powerful AI inference chip, far surpasses China’s indigenous capability and would therefore provide a substantial increase to China’s AI development,” committee chairman John Moolenaar, a Michigan Republican, said on Friday in a letter to US Secretary of
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months