Taiwan’s annual economic growth in the third quarter came in at a weaker-than-expected 1.58 percent, making it more challenging for full-year GDP growth to reach 2 percent, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The figure in the third quarter was 0.89 percentage points lower than the 2.47 percent year-on-year growth forecast by the DGBAS in August.
Sequentially, the economy only expanded 0.09 percent in the third quarter, following a 0.64 percent contraction and 0.58 percent growth in the first and second quarters respectively.
DGBAS senior executive officer Jasmine Mei (梅家瑗) said economic sentiment maintained its tone of a soft expansion in the third quarter.
“The market had thought Taiwan’s economic sentiment would show significant improvement in the second half of this year, but this did not happen in the third quarter,” Mei told a press conference.
The output, consumption and investment sectors all grew at a slower-than-expected pace in the third quarter, she said.
Exports in the third quarter decreased 0.78 percent from a year earlier due to sluggish demand for optical instruments and mineral products made by Taiwanese manufacturers, the DGBAS said in its quarterly report.
Output posted 1.68 percent growth in the third quarter from a year earlier, compared with the 3.66 percent growth forecast by the DGBAS in August.
In addition, private consumption rose 1.56 percent last quarter from a year earlier, down by 0.88 percentage points from the August forecast due to stagnant average salaries, DGBAS said.
Fixed capital formation surged 1.04 percent in the third quarter year-on-year, showing a decrease of 1.98 percentage points from the DGBAS’ forecast in August, as businesses’ willingness to invest was not as strong amid a slowing economy.
With the DGBAS’ current forecast that GDP in the fourth quarter will be 2.61 percent higher than the previous year, full-year economic growth may still hit the 2 percent mark.
However, ongoing food safety issues, as well as the earlier issue of a federal government partial shutdown in the US, would be major uncertainties for the nation’s economy in the near future, the DGBAS said.
The weaker-than-expected economic expansion in the third quarter has further made various foreign banks lower their forecasts for full-year growth.
Hong Kong-based ANZ Research senior economist Raymond Yeung (楊宇霆) said he has revised his full-year GDP forecast downward to 2.18 percent from 2.36 percent.
ANZ Research also revised its interest rate forecast, saying it now expects the central bank to keep its policy rates on hold next month as in the short-term Taiwan’s economy faces strong headwinds.
Leong Wai Ho (梁偉豪), senior regional economist with Barclays Capital based in Singapore, said the unexpected loss of momentum in Taiwan’s economy has led to the group lowering its growth forecast for this year by 0.6 percentage points to 1.6 percent.
However, Leong said economic momentum in the fourth quarter may accelerate to 1 percent sequentially, from the 0.09 percent sequential growth recorded in the third quarter.
HSBC economist Ronald Man (文略韜) said weaker-than-expected GDP growth in the third quarter poses downside risks to the group’s full-year growth forecast of 2.4 percent.
“If economic activity continues to decelerate in the fourth quarter, the full-year GDP growth may fall below 2 percent,” Man said in a research note.