Taiwan: Annual GDP growth moderates in Q3
According to a preliminary reading, GDP growth lost momentum, falling to 3.8% year-on-year in the third quarter, from 7.4% in the second quarter. Q3’s reading marked the softest growth since Q2 2020, although this slowdown was due in large part to the tougher base effect. Underlying momentum was solid, thanks to the taming of the domestic Covid-19 outbreak and the consequent lessening of restrictions: On a seasonally-adjusted quarter-on-quarter basis, economic growth bounced back, with GDP growing 0.6% in Q3, contrasting the previous period’s 1.1% decrease.
Household spending fell 5.5% in the third quarter, which was below the second quarter’s 0.4% contraction. Public spending, meanwhile, accelerated to a 3.3% expansion in Q3 (Q2: +2.5% yoy).
Exports of goods and services growth fell to 14.1% in Q3, marking the worst result since Q4 2020 (Q2: +22.6% yoy). Conversely, imports of goods and services growth picked up to 19.4% in Q3 (Q2: +17.5% yoy), marking the best reading since Q4 2010.
Looking ahead, annual growth will likely be solid in Q4, thanks to the ongoing strong performance of the semiconductor sector and with private consumption aided by the government’s voucher stimulus scheme.
Ho Woei Chen, economist at United Overseas Bank, gave more detail on the Q4 outlook:
“Taiwan’s exports and investments will remain the key growth drivers in Q4 2021 despite some moderation in growth from the high base last year as global demand for electronics is expected to stay robust, supported by launches of new consumer electronics products and seasonal demand while shortages continue to support chips prices. In addition to easing Covid-19 restrictions, private consumption will also be lifted by the second round of distribution in consumption vouchers, a programme that began in October, the size of which is larger than the first Triple Stimulus Vouchers (July 2020) at TWD 5,000 per eligible person.”