The economy contracted for the first time in six years last quarter, falling 1.01 percent from the same period last year, as exports faltered due to a global slowdown and private consumption failed to lend support, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
Despite the sharper-than-consensus-estimated decline of 0.5 percent, the nation narrowly dodged a recession — defined as two consecutive quarters of negative growth.
On a seasonally adjusted annual basis, the economy grew 0.21 percent last quarter, recovering from a 6.56 percent fall in the preceding quarter, DGBAS data showed.
Photo: Pichi Chuang, Reuters
“The economy panned out weaker than expected as both external demand and private consumption stalled,” DGBAS section chief Wang Shu-chuan (王淑娟) told a media briefing.
In August, the statistics agency forecast growth of 0.1 percent year-on-year for the third quarter.
The government will have to revise down its full-year GDP growth forecast, which the agency projected would expand 1.56 percent, Wang said.
The DGBAS is to update its GDP figures next month.
The weak GDP data dampened investor confidence, leading the TAIEX to close 0.2 percent lower at 8,554.31 points.
Exports, which drive 70 percent of the economy, declined 2.85 percent year-on-year last quarter, dragging down GDP by 2 percentage points, the DGBAS report showed.
Domestic demand failed to make up for disappointing exports, rising a mere 0.11 percent as retail sales dropped 1.93 percent from the previous year, also the first contraction since the third quarter of 2009, the report said.
Visitors to major tourist attractions dropped 8.99 percent year-on-year in July and August, and new car licenses shrank 7.88 percent last quarter, it said.
Capital formation — net additions of equipment, buildings and other intermediate goods — declined 1.25 percent last quarter from the previous year, as manufacturers cut inventories and real-estate companies shied away from new construction projects, the report said.
In terms of production, the manufacturing industry fell 3.1 percent last quarter, while the construction industry slumped 6.54 percent, the report said.
The financial and insurance sectors also experienced a soft patch, shrinking 0.51 percent from the same period last year.
Economists yesterday said the nation would remain sensitive to economic dynamics in China and the US.
Australia and New Zealand Banking Group (ANZ) expects Taiwan to benefit from increasing Chinese domestic demand and innovations originating in the US would serve as a catalyst for the local semiconductor industry, ANZ Hong Kong-based economist Raymond Yeung (楊宇霆) said.
Tony Phoo, (符銘財), Taipei-based economist at Standard Chartered Bank, said the local job market remained stable last quarter, despite weak exports, which should provide support for domestic demand.
LIMITS: While China increases military pressure on Taiwan and expands its use of cognitive warfare, it is unwilling to target tech supply chains, the report said US and Taiwan military officials have warned that the Chinese People’s Liberation Army (PLA) could implement a blockade within “a matter of hours” and need only “minimal conversion time” prior to an attack on Taiwan, a report released on Tuesday by the US Senate’s China Economic and Security Review Commission said. “While there is no indication that China is planning an imminent attack, the United States and its allies and partners can no longer assume that a Taiwan contingency is a distant possibility for which they would have ample time to prepare,” it said. The commission made the comments in its annual
DETERMINATION: Beijing’s actions toward Tokyo have drawn international attention, but would likely bolster regional coordination and defense networks, the report said Japanese Prime Minister Sanae Takaichi’s administration is likely to prioritize security reforms and deterrence in the face of recent “hybrid” threats from China, the National Security Bureau (NSB) said. The bureau made the assessment in a written report to the Legislative Yuan ahead of an oral report and questions-and-answers session at the legislature’s Foreign Affairs and National Defense Committee tomorrow. The key points of Japan’s security reforms would be to reinforce security cooperation with the US, including enhancing defense deployment in the first island chain, pushing forward the integrated command and operations of the Japan Self-Defense Forces and US Forces Japan, as
IN THE NATIONAL INTEREST: Deputy Minister of Foreign Affairs Francois Wu said the strengthening of military facilities would help to maintain security in the Taiwan Strait Japanese Minister of Defense Shinjiro Koizumi, visiting a military base close to Taiwan, said plans to deploy missiles to the post would move forward as tensions smolder between Tokyo and Beijing. “The deployment can help lower the chance of an armed attack on our country,” Koizumi told reporters on Sunday as he wrapped up his first trip to the base on the southern Japanese island of Yonaguni. “The view that it will heighten regional tensions is not accurate.” Former Japanese minister of defense Gen Nakatani in January said that Tokyo wanted to base Type 03 Chu-SAM missiles on Yonaguni, but little progress
IN THE MIDDLE: Some of the lawmakers defended the trip as an opportunity for investment, cooperation and to see models that could help modernize Panama A planned trip by some Panamanian lawmakers to Taiwan has unleashed the latest diplomatic spat with China as the Central American country tries to navigate the turbulent waters between the Asian superpower and the US. The Panamanian Ministry of Foreign Affairs and the US ambassador to the country on Wednesday criticized China’s diplomats in Panama for asking the lawmakers to cancel their trip to Taiwan, with the ministry accusing the Chinese embassy of “meddling” in its internal affairs. That followed comments from Panamanian President Jose Raul Mulino a week earlier saying that the planned Taiwan trip did not have the approval of
RSS