The nation’s economy expanded 3.14 percent year-on-year in the first quarter of the year, Directorate-General of Budget, Accounting and Statistics (DGBAS) data showed on Friday. That was higher than a previous estimate from late last month of 3.06 percent. From a quarter-on-quarter perspective, first-quarter GDP rose a seasonally adjusted 1.06 percent compared with the previous estimate for an expansion of 1.56 percent. The upward revision is in line with market expectations, as robust exports and stable private investment offset a sluggish recovery in domestic consumption, the DGBAS said.
However, the official estimate for full-year GDP growth has been revised downward when compared with last month’s estimate. The DGBAS now expects GDP growth to come in at 3.91 percent, lower than its previous estimate of 4.42 percent. This is also in line with market expectations that full-year GDP would be adjusted downward in light of growing macroeconomic headwinds and a surge in the number of local COVID-19 cases. The agency also raised its forecast for the consumer price index to 2.67 percent for this year, up from a previous forecast of 1.93 percent, to the highest level in 14 years.
Taiwan’s overall economic fundamentals remain good compared with other major global economies on the back of trade and manufacturing momentum. Nevertheless, outside factors could weaken the nation’s growth momentum. These include inflationary pressure from Russia’s invasion of Ukraine, China’s economic slowdown and renewed supply chain disruptions due to its rolling COVID-19 lockdowns, and monetary policy tightening in advanced economies, which has piled pressure on emerging markets in terms of fund outflows.
Although exports last month increased 18.8 percent year-on-year — the 22nd consecutive month of annual growth — to reach a record high for the same month, and industrial production also rose 7.33 percent year-on-year last month to mark its best April performance, some economic data have shown that the effects of rising global inflation, China’s lockdowns and the local COVID-19 outbreak have gradually affected Taiwan’s economy.
For instance, the number of workers on unpaid leave continued to rise last month, with a monthly increase of 31,000 employees who worked less than 35 hours per week, although the unemployment rate dropped just 0.04 percentage points to 3.62 percent. Meanwhile, sales at restaurants, beverage shops and food service providers dipped 5.8 percent year-on-year, and 11.1 percent month-on-month, ending six consecutive months of growth.
Export orders — a critical gauge of how exports are likely to perform in the following one to three months — also fell 5.5 percent last month from a year earlier, the first annual contraction in two years, Ministry of Economic Affairs data showed.
In another sign of a slowing economy, the composite index of economic indicators fell last month for the fourth consecutive month, the National Development Council said on Friday.
With rising consumer prices, a slump in the domestic service sector and an increase in the number of furloughed workers, some people’s lives are becoming increasingly difficult, and the government should propose countermeasures. Last week, the Cabinet approved a new subsidy and relief fund of NT$34.56 billion (US$1.18 billion) to support people and sectors hit by the pandemic. The fund is to go toward wage subsidies, vocational training, rent waivers, loan extensions and stimulus spending.
The aid needs to get into people’s pockets in a more timely and efficient manner without being delayed by red tape. Moreover, if inflation pressure persists while the economy is slowing, the central bank must be prudent in its monetary policy maneuvering.
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