Taiwan: Economic growth remains strong in the first quarter
May 19, 2011
In the first quarter, GDP rose 6.5% over the same period last year, according to a 19 May estimate, which was above the advance estimate of 6.2% published on 29 April. The reading was below the revised 7.2% expansion recorded in the fourth quarter (previously reported: +6.9% year-on-year) but exceeded market analyst expectations that the economy would expand 6.2%. The first quarter deceleration reflected slower growth in the domestic sector, mainly due to a negative contribution from inventory changes. Private consumption accelerated from a 2.7% annual increase in the fourth quarter to a 5.0% expansion, while gross fixed investment expanded 9.6% (Q4 2010: +12.3% yoy). The net contribution from inventories swung from plus 0.3 percentage points in the previous period to minus 1.9 percentage points. Therefore, domestic demand decelerated to a 3.0% increase, down from the 5.1% expansion registered in the fourth quarter. The net contribution from the external sector to overall growth improved from a 2.8 percentage-point contribution in the fourth quarter to a 3.9 percentage-point contribution in the first. Exports of goods and services grew 10.9% (Q4 2010: +15.1% yoy), while imports expanded 6.6% (Q4 2010: +14.3% yoy). A quarter-on-quarter comparison suggests a stronger expansion than the annual figures imply, as the economy expanded 4.4% over the previous quarter in seasonally adjusted terms (Q4 2010: +0.3% qoq). Owing to strong export activity and sound private consumption, the government expects the economy to grow 5.06% this year.