Taiwan’s economy grew faster than expected last quarter, ending a pandemic-stricken year in remarkably good shape, and is poised to expand further this year as major economic gauges continue to outperform.
GDP expanded 5.09 percent year-on-year in last year’s final quarter, revised Directorate-General of Budget, Accounting and Statistics (DGBAS) data showed on Saturday, stronger than the 4.94 percent growth it forecast on Jan. 29. The strong performance followed a revised 4.26 percent growth in the third quarter of last year. On a quarterly basis, GDP rose 1.43 percent, it said, following a revised 4.34 percent gain in the previous quarter.
The relatively safe COVID-19 situation in Taiwan allowed the government to ease virus containment measures, while stimulus policies helped domestic demand suppressed by the pandemic in the first half of last year to return in the second half, which boosted GDP to expand 4.69 percent in the July-to-December period, compared with 1.41 percent growth in the January-to-June period.
The economy was fueled by surprisingly resilient exports. DGBAS data showed better-than-expected growth of 5.67 percent last quarter in New Taiwan dollar terms, as COVID-19 disruptions around the world fueled demand for Taiwan-made electronic components, information and communications technology products as well as audio-visual devices, even as a stronger NT dollar made them more expensive for overseas buyers.
Export growth was better than the average annual growth of 4.14 percent over the past 10 years and slightly higher than the 5.65 percent the DGBAS predicted last month. Thanks to a steady recovery, the economy over the whole of last year expanded by a revised 3.11 percent, better than the DGBAS’ 2.98 percent growth forecast last month, making Taiwan one of the few major economies in the world that avoided a contraction when many others struggled to contain the COVID-19 pandemic.
However, last year’s GDP figure was below the average annual growth of 3.6 percent in the past 10 years, indicating that the pandemic affected economic growth momentum to a certain degree.
The DGBAS has forecast that the economy would grow 4.64 percent this year, the strongest since 2015, on the back of resilient exports, steady domestic demand and continued private investment.
Some economists have suggested that the nation’s growth momentum could extend into next year if the inventory cycle picks up further, while Taiwan’s export-reliant economy would also benefit from a solid cyclical uptrend in investment and technology innovation.
However, an uptick in worldwide COVID-19 cases in the past few months, in part due to new virus variants, has caused the government to tighten virus containment measures, which could affect economic activity and consumption, and the efficacy of vaccines against the new variants remains uncertain.
In the short term, the strength of the economy would still largely depend on whether the pandemic at home and abroad can be brought under control.
However, the nation’s successful control of the outbreak has significantly increased Taiwan’s global visibility, and last year’s GDP growth has shown the world that the nation can forge its own path, thanks to industrial prowess and government policies.
This gives Taiwan’s industry an opportunity to transform and upgrade amid trade and technology tensions between the US and China, and a rapid realignment of global supply chains. The economy could achieve long-term sustainable development if the government continues to help industries develop new technologies and services.
As a small country, Taiwan must carve out a niche for itself in the world, find its strategic advantages and use them to the fullest.
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