Annual economic growth in the second quarter came in at a higher-than-expected 2.27 percent, mainly due to improving exports and recovering private consumption, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The figure was 0.29 percentage points higher than the 1.98 percent year-on-year growth forecast by the DGBAS in May.
Sequentially, the economy expanded 0.59 percent in the second quarter, skirting a technical recession following a 0.69 percent contraction in the first quarter.
Exports in the second quarter grew 2.43 percent from a year earlier, on the back of rising global demand for electronic and mineral products made by Taiwanese manufacturers, the DGBAS said in its quarterly report.
That meant net foreign demand contributed 1.95 percentage points to the 2.27 percent year-on-year growth in the second quarter, the report said.
Meanwhile, private consumption rose 1.61 percent in the second quarter from a year earlier, up 0.19 percentage points from the May forecast, on improving momentum on the financial market and slowing inflationary pressure, DGBAS said.
“Although the public may not feel that much [rebound in private consumption], the fees for securities transactions and mutual fund management still came from their pockets and helped raise the sector,” DGBAS senior executive officer Jasmine Mei (梅家瑗) told a press conference.
However, the DGBAS said the economy is still in a “soft expansion,” because the investment sector did not show a significant rebound as expected in the second quarter.
Despite the rise in private investment by the semiconductor sector, sluggish public investment made the fixed capital formation drop 3.03 percent during April-to-June period from a year ago, dragging down GDP growth by 0.52 percentage points, the data showed.
Hong Kong-based Credit Suisse economist Christiaan Tuntono yesterday said that Taiwan’s year-on-year GDP growth in the second quarter somewhat surprised him.
The brokerage maintained its expectation that the central bank would keep its discount rate on hold in the second half of this year, as growth is starting to show signs of improvement.
ANZ Bank said the stronger-than-expected economic growth in the second quarter signaled that the economy may have bottomed out.
Although the economic slowdown in China may pose a downside risk to Taiwan’s growth in the second half of this year, the recovery in the US and Japan will likely offset any impact, ANZ senior Greater China economist Raymond Yeung (楊宇霆) said in a research note.
Given ample liquidity in the banking system and low inflationary pressure, Yeung said the central bank may continue to hold the policy rate at 1.875 percent at its board meeting next month.