Taiwan’s economy contracted at a record pace in the first quarter as exports contracted faster than expected, prompting the government to trim the GDP forecast for this year to a decline of 4.25 percent with an assurance that the recession will ease from this quarter.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) unveiled the latest economic data yesterday, which showed GDP sinking by a record 10.24 percent, worse than the revised 8.6 percent fall in the fourth quarter of last year.
“Exports shrank by an unprecedented 36.6 percent in the first quarter, which has been the main brake on the economy,” DGBAS Director-General Shih Su-mei (石素梅) told a media briefing yesterday.
Slumping exports had lowered factory utilization rates, dampened private investment, pushed up unemployment and curbed consumer spending, Shih said.
“Together, export-related factors sank GDP by 7.7 percentage points, accounting for three quarters of the first-quarter downturn,” the statistics official said.
Private investment dropped 41 percent, while private consumption dipped 1.41 percent between January and March, the report said.
As the global landscape remains dismal, the DGBAS revised down the GDP prediction to minus 4.25 percent for this year, from minus 2.97 percent forecast in February, Shih said.
Tsai Hung-kun (蔡鴻坤), DGBAS statistics division director, said the recession had hit bottom and economic data would show an improvement this quarter.
The economy is expected to contract 8.5 percent and 2.98 percent in the second and third quarters respectively, recovering to grow 5.2 percent in the fourth quarter, the report said.
“The worst is over as seen by rising export figures and the rallies in the equity market,” Tsai said.
Exports, the mainstay of the economy, are forecast to drop 21.81 percent this year, with a decline of 32.87 percent in the second quarter and 21.31 percent in the third quarter, the report said.
Data is expected to register a positive growth of 11.31 percent in the fourth quarter.
Tsai said government spending and Chinese tourists would also facilitate recovery.
“Assorted stimulus measures are expected to lift GDP by 2.97 percentage points this year,” Tsai said.
“The economy would contract 7.22 percent otherwise,” he said.
Cheng Cheng-mount (鄭貞茂), head economist at Citigroup Taiwan Inc, agreed the downturn has bottomed out and GDP will improve in coming quarters, albeit at a very slow pace.
Cheng said the worse-than-expected GDP figure for the first quarter is likely to negatively affect investor optimism a bit and could lead to the central bank holding rates unchanged for an extended period.
“However, a better economic outlook and ample liquidity should continue to underpin financial market performance,” he said.
Tony Phoo (符銘財), chief economist at Standard Chartered Bank in Taipei, said yesterday that while it was too early to speculate on recovery based on the GDP figures released, a deeper recession was unlikely for the rest of the year.
“The economy is likely to rebound gradually in the second half, driven by the recovery in domestic demand, especially under the impacts of the government’s NT$150 billion stimulus package and improving cross-strait relations,” Phoo said.
Taiwan is projected to lose a working-age population of about 6.67 million people in two waves of retirement in the coming years, as the nation confronts accelerating demographic decline and a shortage of younger workers to take their place, the Ministry of the Interior said. Taiwan experienced its largest baby boom between 1958 and 1966, when the population grew by 3.78 million, followed by a second surge of 2.89 million between 1976 and 1982, ministry data showed. In 2023, the first of those baby boom generations — those born in the late 1950s and early 1960s — began to enter retirement, triggering
ECONOMIC BOOST: Should the more than 23 million people eligible for the NT$10,000 handouts spend them the same way as in 2023, GDP could rise 0.5 percent, an official said Universal cash handouts of NT$10,000 (US$330) are to be disbursed late next month at the earliest — including to permanent residents and foreign residents married to Taiwanese — pending legislative approval, the Ministry of Finance said yesterday. The Executive Yuan yesterday approved the Special Act for Strengthening Economic, Social and National Security Resilience in Response to International Circumstances (因應國際情勢強化經濟社會及民生國安韌性特別條例). The NT$550 billion special budget includes NT$236 billion for the cash handouts, plus an additional NT$20 billion set aside as reserve funds, expected to be used to support industries. Handouts might begin one month after the bill is promulgated and would be completed within
The National Development Council (NDC) yesterday unveiled details of new regulations that ease restrictions on foreigners working or living in Taiwan, as part of a bid to attract skilled workers from abroad. The regulations, which could go into effect in the first quarter of next year, stem from amendments to the Act for the Recruitment and Employment of Foreign Professionals (外國專業人才延攬及僱用法) passed by lawmakers on Aug. 29. Students categorized as “overseas compatriots” would be allowed to stay and work in Taiwan in the two years after their graduation without obtaining additional permits, doing away with the evaluation process that is currently required,
IMPORTANT BACKER: China seeks to expel US influence from the Indo-Pacific region and supplant Washington as the global leader, MAC Minister Chiu Chui-cheng said China is preparing for war to seize Taiwan, Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said in Washington on Friday, warning that Taiwan’s fall would trigger a regional “domino effect” endangering US security. In a speech titled “Maintaining the Peaceful and Stable Status Quo Across the Taiwan Strait is in Line with the Shared Interests of Taiwan and the United States,” Chiu said Taiwan’s strategic importance is “closely tied” to US interests. Geopolitically, Taiwan sits in a “core position” in the first island chain — an arc stretching from Japan, through Taiwan and the Philippines, to Borneo, which is shared by
RSS