Sat, Apr 29, 2017 - Page 1 News List

Economy grows 2.56% in Q1, beating expectations

By Crystal Hsu  /  Staff reporter

Directorate-General of Budget, Accounting and Statistics (DGBAS) senior executive officer Huang Wei-jie announces that the nation’s economy grew 2.56 percent in the first quarter at a news conference at the DGBAS offices in Taipei yesterday.

Photo: Cheng Chi-fang, Taipei Times

The nation’s economy grew 2.56 percent in the first quarter, more than the 2.45 percent increase the government forecast in February, as local semiconductor firms stepped up investment to meet global demand for advanced chips, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.

The better-than-expected showing would allow the DGBAS to raise its GDP forecast for this year from its previous forecast of 1.92 percent, as demand would remain robust, the agency said.

“The performance so far merits an upward revision of 0.03 percentage points to 1.95 percent GDP growth this year,” DGBAS senior executive officer Huang Wei-jie (黃偉傑) said.

The agency is due to update its GDP forecast next month after factoring in other data, he said.

Capital formation — including investment by the public and private sectors, as well as inventory — gained 8.1 percent in the first quarter compared with the previous year, better than the 7.11 percent increase forecast in February, the DGBAS said.

Capital equipment purchases increased 13.51 percent year-on-year during the first quarter, more than offsetting a persistent decline in the construction industry, as well as lackluster consumer and government spending, the agency said.

Private consumption rose 1.62 percent, while government spending contracted 4.67 percent, both lower than the February forecast, it said.

A relatively warm winter dampened sales of winter clothing, furniture and mobile devices, the agency said, adding that while the crude oil price picked up, total sales declined.

That explained why retail sales contracted 0.64 percent in the first quarter, the first downturn since the fourth quarter of 2015, the agency said.

However, the number of outbound travelers rose 6.58 percent, stock turnover picked up 8.62 percent and restaurant sales advanced 3.22 percent, lending support to the 2.06 percent increase in domestic demand, it said.

Outbound shipments surged 15.07 percent in US dollar terms in the first quarter, the fastest pace in six years, but real exports, including goods and services, grew only 6.99 percent, lower than the 7.75 percent forecast in February, it said.

A sharp decline in the number of inbound travelers, particularly from China, accounted for the lackluster result, despite an improvement in exporters’ profits, Huang said.

External demand contributed 0.73 percentage points to GDP growth last quarter, the agency said.

The annualized growth rate of 2.93 percent, when compared with 1.92 percent the previous quarter, suggests the recovery is gathering momentum, it said.

Raymond Yeung (楊宇霆), a Hong Kong-based economist with ANZ, said the first-quarter results have reinforced his belief that GDP growth would climb to 2.2 percent this year, adding that the headline GDP figure understates growth momentum.

The central bank might raise its rediscount rate by 12.5 basis points to 1.5 percent at its next board meeting in June, Yeung said.

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