The economy grew 3.46 percent year-on-year last quarter on the back of exports, but missed the government’s forecast of 3.5 percent due to weak private investment and fiscal spending, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The expansion, while better than the 3.35 percent increase three months earlier, translated into a parlous 0.27 percent gain on a seasonally adjusted basis, slowing from 1.17 percent in the preceding quarter, the DGBAS said in a report.
The statistics agency attributed the lackluster GDP reading to poor private investment and government spending, which contracted 1.2 percent and 2.5 percent respectively during the January-to-March period.
Domestic demand, which is widely expected to drive the economy this year, contributed a mere 0.77 percentage points last quarter, the report said, while external demand generated 2.69 percentage points.
“Capital equipment purchases faltered last quarter, especially among major semiconductor manufacturers, even though domestic airlines expanded their fleets,” DGBAS official Jasmine Mei (梅家瑗) said.
Private consumption lifted GDP by 1.38 percentage points last quarter, as wage increases and energy cost savings energized tourism and car sales, the report found.
Outbound tourism jumped 12.13 percent last quarter, while domestic highway tolls gained 11.37 percent and new car licenses picked up 9.09 percent, the report said.
The Japanese yen’s sharp depreciation helped attract Taiwanese tourists and boost passenger loads for Taiwanese airline companies, the report said.
By industry breakdown, manufacturers continued to play the backbone, raising GDP growth last quarter by 1.9 percentage points, the report said.
Retailers, financial service providers, hoteliers, restaurants, real-estate builders and other sectors all made contributions of less than 1 percentage point, the report said. That affirms the nation’s heavy reliance on exports and therefore makes it susceptible to headwinds abroad, the report added.
Foreign institutes remained positive about the nation’s growth outlook, but with growing caution.
Barclays PLC cut its forecast for the nation’s GDP growth by 50 basis points to 4 percent for this year, on concerns over a deeper slowdown in China and a more gradual recovery in the US.
“We expect public spending to stay subdued ahead of the presidential and legislative elections next year, in light of little progress on many infrastructure projects, such as the Taoyuan Aerotropolis Project, amid rising political uncertainty,” Barclays economist Leong Wai Ho (梁偉豪) said in a note.
Australia and New Zealand Banking Group (ANZ) stood by its growth forecast of 4.2 percent for Taiwan, but turned more vigilant on downside risks.
Local manufacturers may substitute local production with overseas output after expanding facilities in offshore sites last year, ANZ economist Raymond Yeung (楊宇霆) said.
The ongoing drought and unstable water supplies would also interrupt domestic activities, Yeung said.
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