Taiwan’s economy last quarter expanded 2.32 percent, missing the government’s August forecast by 0.22 percentage points, as lethargic capital formation offset strong consumer spending, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said in an advance report released yesterday.
The GDP showings could push GDP growth for the whole of this year down to 1.55 percent from 1.61 percent if the situation remains unchanged, DGBAS official Wang Tsui-hua (王翠華) said.
The agency is to make an official update later this month.
Photo: CNA
Capital formation, or adding equipment, tools, transportation assets and electricity to produce goods and services, slumped 14.04 percent in the July-to-September period, 9.61 percentage points lower than forecast, Wang said.
The poor results were despite domestic airline companies expanding their fleets to meet a surge in demand for cross-border travel in the post-COVID-19 pandemic era, the official said.
“Private firms by and large refrain from buying input materials and capital equipment to cope with murky business visibility,” Wang said, adding that public enterprises and government organizations also had a conservative attitude.
Capital formation by itself dragged the third-quarter GDP reading by 3.93 percentage points, the DGBAS said.
Although firms mostly stand by their capital spending, some are bound to lag behind in terms of budget execution, Wang said.
However, private consumption rose 8.9 percent from a year earlier, helped by rallies in the TAIEX and a pickup in automotive sales, leisure and recreation activity over the summer, the agency said.
At the same time, outbound visits increased more than fivefold, although travel expenditure had little bearing on the GDP calculation, it said.
In all, domestic demand rose 0.18 percent, contributing 0.15 percentage points to third-quarter GDP, it said.
External demand, the main drag of the past few quarters due to a global economic slowdown, returned to positive territory, contributing 2.16 percentage points to GDP growth, despite disappointing exports and imports, it said.
Exports, equivalent to 60 percent of GDP, shrank 5.08 percent in US dollar terms, trailing the government’s projection by 1.99 percentage points as poor end-market demand for tech gadgets eclipsed strong sales of devices used in artificial intelligence applications, it said.
Imports tumbled 19.06 percent as local firms tightened their belts, avoiding purchases of capital equipment, the DGBAS said, adding that a travel deficit added to the pace of decline.
Imports of goods and services missed the August forecast by 6.67 percentage points, it said.
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