Taiwan’s GDP expanded at a faster-than-expected pace last quarter, bringing full-year economic growth to 4.3 percent — the most robust performance in three years, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.
The economy grew 1.84 percent in the fourth quarter, beating the 1.72 percent forecast by the DGBAS in November. That lifted last year’s GDP growth by 0.03 percentage points past the agency’s forecast of 4.27 percent.
For this year, it forecast that GDP would grow 3.29 percent.
Photo: CNA
The primary factors that propelled last quarter’s GDP growth were stronger fixed asset investment and improvement in inventory adjustments, the DGBAS said in a statement.
Local manufacturers imported 41.23 percent more manufacturing equipment last quarter compared with the same period last year, the statistics showed.
Exports jumped at an annual rate of 8.19 percent last quarter, driven by robust demand for emerging technologies such as artificial intelligence (AI)-related products and new information and communications technology items, but the growth fell short of the agency’s estimate of 10.28 percent.
Imports swelled 18.3 percent year-on-year, which also lagged behind an estimate of 18.52 percent growth. The DGBAS attributed the growth to increased investments in manufacturing equipment and raw material buildup.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s biggest contract chipmaker, last year invested a record-high US$29.76 billion in capital expenditure and plans to spend up to US$42 billion this year, which could further drive up imports.
Net exports, the value of the country’s total exports minus the value of its total imports, negatively impacted Taiwan’s GDP by 3.5 percentage points last quarter.
Domestic demand rose 6.27 percent last quarter, contributing 5.34 percentage points to the overall economic growth mostly due to strong growth in capital formation, the DGBAS said.
Private consumption, a major constituent of domestic demand, increased 1.94 percent year-on-year last quarter, benefiting from wage hikes, stock market rallies and year-end holiday consumption. The figure outpaced the agency’s forecast of 1.65 percent growth.
Government consumption rose 2.26 percent annually last quarter, lower than the agency’s estimate of 4.29 percent. Capital formation surged 17.53 percent — well ahead of the DGBAS’ forecast of 11.3 percent.
Separately, a majority of the central bank’s board of directors expect the economy to grow steadily this year and see no need to raise interest rates in the near term, according to the minutes of the quarterly board meeting released yesterday.
The central bank expects GDP to expand 3.13 percent this year, without pricing in potential tariff hikes by the US.
The bank left key interest rates unchanged for a third straight time last month, and retained select credit controls after the domestic property market cooled down moderately as a result of seven rounds of credit restrictions.
However, the bank cautioned that the US’ trade policy, tariff hikes particularly, poses great uncertainty after the return of Donald Trump the White House.
That would create challenges for the central bank in determining its monetary policy, it said.
Some of the board directors were also concerned about inflation risks, and one director said the board should closely monitor changes in the consumer price (CPI) index as people have deeply felt the pinch of high rents and increases in food prices and healthcare costs.
The bank forecast that CPI growth would moderate to 1.89 percent from 2.18 percent last year.
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