Taiwan’s economy contracted 0.73 percent last quarter, missing the government’s May forecast by 1.23 percentage points, as private consumption took a hard hit from the COVID-19 outbreak, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
It is the first decline since the first quarter of 2016 and the worst decline since the global financial crisis in 2009, DGBAS National Income Section head Yu Ming-chun (游敏君) said.
The statics agency earlier predicted 0.53 percent growth for the April-to-June period, but the pandemic wreaked bigger havoc than expected, Yu said.
Photo: CNA
The seasonally adjusted annual rate contracted for the second consecutive quarter by 8.82 percent, widening from a 3.57 percent fall three months earlier, and pushed Taiwan into a technical recession.
“Sluggish private consumption is no doubt the main drag, as tourism activity came to an abrupt halt last quarter,” Yu said.
Outbound travel plunged 98.94 percent from a year earlier, deeper than a 49.17 slump in the first quarter, the agency’s report said.
Consequently, overseas travel expenses nosedived 96.39 percent, wiping out private consumption by 6 percentage points, resulting in a 5.13 percent decline, it said.
Retail sales dropped 5.76 percent, while restaurant revenues shrank 12.36 percent, the agency said.
The amount of trips on trains — including metropolitan, railway and high-speed trains — fell 20 to 30 percent, while revenue for domestic airline companies dwindled 92.86 percent, it said.
Travel restrictions forced people to stay in Taiwan and shifted some travel spending from abroad to the local market, Yu said, adding that the domestic travel industry would benefit this quarter.
Despite border controls remaining in place, the overall situation would improve as Taiwanese have largely resumed social gatherings, shopping, dining and domestic trips, Yu said.
The DGBAS is to update its growth forecast on Aug. 14.
Capital formation bucked the trend and shored up GDP by 2.19 percentage points, as local semiconductor firms bought new equipment to meet expansion needs and maintain technology leadership, the agency said, adding that government spending on infrastructure projects also benefited the economy.
Exports, traditionally the key growth driver, decreased 2.42 percent due to soft demand for mineral, base metal and plastic products, it said.
High-tech electronic components fared strong with a 20.32 percent increase, thanks to 5G deployment, and remote working and learning, while information and communication products expanded 12.52 percent from a year earlier for similar reasons, Yu said.
Imports declined 4 percent, allowing external demand to contribute 0.1 percentage point to GDP, she added.
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