The Taiwanese economy shrank at the sharpest pace since 2009, recording its second quarter of contraction in a row as a plunge in global demand for chips showed little sign of abating.
GDP in the first quarter of this year dropped 3.02 percent from the same period last year, the sharpest fall since June 2009, the Directorate-General of Budget, Accounting and Statistics (DBGAS) said.
Economists surveyed by Bloomberg forecast a fall of 1.25 percent.
Photo: CNA
“The first-quarter GDP is worse than expected, as exports and corporate investment contracted more harshly than our forecast,” DGBAS statistics division head Wu Pei-hsuan (吳佩璇) told a news conference in Taipei.
The agency expected GDP to decline at annual rate of 1.2 percent last quarter, Wu said.
The weaker-than-expected economic performance prompted the DGBAS to cut its GDP growth forecast for this year to 1.67 percent, from its estimate of 2.12 percent growth in February.
Concerning the new GDP growth estimate, Wu said there was still a chance that Taiwan sees an economic growth rate of more than 2 percent, taking into account the effects of NT$6,000 rebates to Taiwanese and eligible foreign residents, which are forecast to boost GDP growth by 0.35 to 0.45 percentage points.
Private consumption in the first quarter grew 6.6 percent from a year earlier, mainly driven by a robust rebound in spending on dining in, accommodation, recreation and transportation, DGBAS data showed.
The consumption growth rate was 2.37 percentage points higher than the previous forecast made in February, it said.
The worse-than-expected contraction highlights an ongoing struggle to rediscover growth as Taiwanese exporters contend with falling overseas demand for their products.
Chip heavyweight Taiwan Semiconductor Manufacturing Co (台積電) said in an earnings call last week that the second quarter would likely be the bottom of the current business cycle before demand recovers later in the year.
Compounding the issue is a shortfall of workers willing to take jobs in the services industry, hampering domestic demand from mitigating the lackluster performance of the export sector.
The latest figures run counter to burgeoning signs of improvement in other export economies in the region.
South Korea’s GDP grew 0.3 percent in the first quarter, more than economists had expected.
South Korean officials project growth to pick up further by the end of the year.
China — Taiwan’s largest export market — saw its economy expand 4.5 percent in the first quarter. That was fueled in large part by surging consumption as shoppers, travelers and diners increased spending as the country’s strict COVID-19 controls ended.
There are some small signs of potential improvement for Taiwan.
The government’s monitoring indicator, an index of forward-looking data points, gained last month.
While the index’s reading of 11 indicates that the economy remains “sluggish,” it was the first improvement in the data since October last year.
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