Taiwan GDP


Economy slows sharply to three-year low in Q2

In the second quarter of 2015, GDP grew a meagre 0.5% over the same period of the previous year, according to official data released by the Directorate General of Budget, Accounting and Statistics (DGBAS) on 14 August. The reading was slightly above the advanced estimate of a 0.6% contraction but notably below Q1’s revised 3.8% growth (previously reported: +3.4% year-on-year). In addition, the result marked the weakest expansion since Q2 2012.

Q2’s downturn came on the back of a sharp decline in the external sector, while domestic demand improved compared to last quarter. Government consumption rebounded from a 2.7% contraction in Q1 to a 0.1% expansion in Q2. In addition, gross fixed capital formation improved noticeably, swinging from a 0.2% contraction in Q1 to a 1.3% expansion in Q2. However, private consumption weakened from a 3.5% year-on-year expansion in Q1 to a 2.9% rise in Q2 2015.

On the external front, exports of goods and services deteriorated markedly, contracting 1.3% in Q2. The result contrasted Q1’s 6.1% expansion and was the worst result since Q2 2012. In addition, imports slowed to a 2.2% expansion (Q1: +2.7% yoy). As a result, the external sector’s net contribution to overall economic growth swung significantly from the plus 2.6 percentage points registered in Q1 to minus 2.4 percentage points in Q2.

On a sequential basis, GDP fell 1.7% over the previous period in seasonally-adjusted terms, which contrasted the revised 0.6% increase observed in the first quarter of the year (previously reported: +0.7% quarter-on-quarter).

As a result of the weak second quarter reading, the government significantly downgraded its GDP forecast. The government now sees the economy expanding 1.56% in 2015 (previous estimate: +3.51%). In 2016, the government sees GDP growing 2.70%. FocusEconomics Consensus Forecast panelists project GDP to grow 2.8% this year, which is down 0.4 percentage points from last month’s forecast. For 2016, the panel estimates that economic activity will increase 3.4%.

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Taiwan GDP Chart

Taiwan GDP Q2 2015 0

Note: Year-on-year changes of GDP in %.
Source: Directorate General of Budget, Accounting and Statistics (DGBAS) and FocusEconomics Consensus Forecasts.

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