Sat, Nov 03, 2018 - Page 12 News List

Q3 GDP grew a weaker-than-expected 2.28%

HEADWINDS:The DGBAS might have to revisit its full-year forecast if key indicators continue to weaken as a result of the US-China trade dispute

By Crystal Hsu  /  Staff reporter

The nation’s GDP expanded 2.28 percent annually during the July-to-September period, falling short of the official target of 2.36 percent, on weaker-than-expected private consumption as the local and global economic scene grew increasingly turbulent, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said on Wednesday.

The statistics agency might have to trim its full-year growth forecast of 2.69 percent, which it made in August, after all data have come in and it gives an economic update on Nov. 30.

Exports, the main driver of the nation’s economy, were robust last quarter, but imports advanced at a faster pace, so external demand last quarter dragged GDP by 1.88 percentage points, the DGBAS report showed.

The phenomenon is not all negative, because capital equipment purchases accounted for the surge in imports by local firms that are expanding or upgrading facilities, a DGBAS official said.

Semiconductor firms in particular increased capital equipment purchases by 16.91 percent last quarter from a year earlier, reversing a spending decline in the five previous quarters, the report found.

Developers and builders also spent more on construction projects, helping lift capital formation by 17.46 percent in the third quarter, higher than the DGBAS’ projection of a 14.94 percent increase.

Altogether, capital formation contributed 3.36 percentage points to GDP growth, the report said.

Consumer spending, another pillar of private consumption, saw a mild 1.9 percent increase from a year earlier.

Consumption of oil and other products continued to climb and retail sales gained 2.31 percent, but new car sales declined and the number of outbound travelers slowed.

Stock trading was sluggish, with growth in daily turnover moderating to 8.35 percent last quarter, compared with 30 percent gains or higher in previous quarters, the report said.

The TAIEX shed 10.94 percent last month, as major technology firms turned conservative amid concern over an escalating US-China trade row that might hurt the regional supply chain and dampen business.

Taiwan Institute of Economic Research (台灣經濟研究院) economist Gordon Sun (孫明德) said that consumers might further cap spending this quarter as global market pullbacks create a negative wealth effect.

Exports would also slow, as the trade dispute is eroding the benefits of peak season sales, Sun said.

The government could help compensate by increasing infrastructure expenditure and encouraging capital repatriation, he said.

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