The nation’s GDP expanded 2.03 percent last quarter from a year earlier, slightly slower than estimates last month of 2.06 percent, as domestic demand single-handedly supported a mild recovery, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The agency raised its forecast for GDP growth to 1.35 percent for the whole of this year, an increase of 0.13 percentage points from its prediction in August, after exports fared better than expected.
“The recovery gained traction each quarter and the pace is expected to accelerate for the rest of the year,” DGBAS Minister Chu Tzer-ming (朱澤民) told a media briefing.
The 2.03 percent pickup is the fastest in six quarters after the nation’s export-focused economy emerged from three consecutive quarters of decline in the April-to-June period, the DGBAS’ quarterly report showed.
Exports, which accounted for 75 percent of GDP growth, are forecast to increase 7.17 percent this quarter, aided by solid demand for electronics components, particularly semiconductors, the report said.
Aggressive imports of capital equipment by local semiconductor firms reflect capacity expansion needs and a rosy business outlook, Chu said, referring to spending by Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker.
Private investment increased 8.1 percent last quarter, much faster than a 1.28 percent forecast, Chu said.
The trend, coupled with government efforts to ramp up innovative industries, will lend further support to private investment and the overall economy, with GDP growth expected to reach 1.87 percent next year, Chu said.
The projection represented a marginal slowdown from 1.88 percent the agency predicted in August, which Chu attributed entirely to a higher base expected for this year.
The DGBAS said that US president-elect Donald Trump’s win at the polls has created uncertainty for Taiwan’s economy if the real-estate tycoon realizes campaign pledges to raise trade barriers.
“Taiwanese manufacturers might suffer if Trump makes Apple Inc and other firms move production lines back to the US, as many local firms supply components for its products,” Chu said.
Generally speaking, when GDP in the US gains 1 percentage point, Taiwan’s economy grows by 0.07 percentage points, Chu said.
The correlation between Taiwan and China is stronger, as Chinese tourists alone generated NT$250 billion (US$7.83 billion at the current exchange rate) in tourism revenue, or 1.5 percent of GDP, last year, Chu said.
The government has sought to offset revenue loss from declining Chinese tourism numbers by wooing travelers from other countries and has made some headway, he said.
Protectionism would surely constrain global trade and the DGBAS will offer assessments when updating growth figures in February after Trump assumes office in January, he added.
GDP growth might rise 2.37 percent this quarter, boosted by the high-sales season for consumer electronics, the report said.
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