Taiwan’s economy last quarter contracted 0.86 percent, missing the government’s forecast of growth of 1.52 percent, as a global economic slowdown wreaked havoc on exports, preliminary figures released yesterday by the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed.
The disappointing results put an end to 26 straight quarters of growth after exports tumbled 8.6 percent, the worst retreat since the global financial crisis in 2008, as inflation and monetary tightening around the world, as well as rising COVID-19 infections in China, chilled demand for tech and non-tech products, DGBAS statistics division head Wu Pei-hsuan (吳佩璇) said.
The predicament might persist this and next quarter as companies cut production to cope with sluggish demand and digest excess inventory, Wu told an online news conference.
Photo: CNA
On a seasonally adjusted annual basis, GDP last quarter fell 4.24 percent, DGBAS data showed.
Poor external demand weighed on the economy by 2.59 percentage points, more than offsetting a 2.04 percent increase in domestic demand, Wu said.
Shipments to China slumped 15.6 percent, as Beijing’s “zero COVID-19” policy smothered economic activity for most of last year, the official said.
It remains to be seen how the world economy would pan out after China’s abrupt opening last month, Wu said.
Taiwan’s trade with other destinations also took a hit. Exports to the US fell 3.8 percent, while those to Europe dropped 9.3 percent and shipments to ASEAN markets shrank 1.7 percent, the agency said.
Private consumption fared stronger with a 2.89 percent expansion, as service providers saw robust business amid loosened COVID-19 restrictions and Taiwan’s opening, Wu said, adding that the government lent support by increasing spending.
Capital formation was virtually neutral, edging up 0.03 percent after local firms bought more capital equipment, but trimmed inventory, Wu said.
The fourth-quarter results slowed overall GDP growth for the whole of last year to 2.43 percent, the lowest since 2016 and below the 3.06 percent gain the statistics agency forecast in November.
“Economic headwinds abroad turned out much worse than expected,” Wu said, adding that economic challenges loom larger ahead.
The agency in November forecast that exports would continue to contract in the following six months.
Wu said it would provide a more detailed update next month.
Global GDP growth is likely to fall, which would be unfavorable to Taiwan’s export-reliant economy, the National Development Council said.
The government would increase its expenditure this year, and has introduced special budgets to support affected sectors and people, the council said.
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