Taiwan: Economy shows solid growth in fourth quarter of 2016
February 13, 2017
Taiwan’s GDP increased 2.6% year-on-year in Q4 2016, accelerating from the 2.0% increase in Q3, marking the fastest pace of growth since Q2 2015. The result nevertheless missed the 2.9% increase the markets had expected. Sequentially, economic growth moderated. GDP—adjusted for seasonal factors—expanded 0.5% from the previous quarter in Q4, which was down from the 1.0% rise in Q3.
The headline figure continued to suggest positive economic dynamics and looking at the details, exports of goods and services accelerated substantially in the final quarter of 2016 (Q4: +8.2% year-on-year; Q3: +3.6% yoy). Imports also jumped (Q4: +9.4% yoy; Q3: +5.3% yoy), bringing the contribution from net exports to overall economic growth to 0.4 percentage points in Q4, swinging from a 0.4 percentage-point drag in Q3. In terms of domestic demand, private consumption slowed from a 2.5% increase in Q3 to a 1.3% expansion in Q4. Growth in gross investment picked up from a 3.1% increase in Q3 to a massive 8.2% expansion in Q4, supported by a strong rebuilding of inventories. On a negative note, government consumption decreased 1.1% in Q4, which was the first fall since Q1 2015.
In the full year 2016, Taiwan’s economic growth was 1.4%, strengthening from the 0.7% expansion in 2015. Taiwan’s economy is one of the most exposed to China’s and Q4’s acceleration is consistent with a modest upturn in GDP growth in China in the final quarter of the year.
Author: Ricardo Aceves, Senior Economist