Taiwan: Economy tallies larger-than-expected contraction in Q4
February 18, 2016
In the fourth quarter of 2015, GDP contracted a revised 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 17 February. The reading represents a steeper contraction from the 0.3% decline reported in the advanced estimate released on 19 January. Q4’s print represents a slight improvement from Q3’s revised 0.8% contraction (previously reported: -0.6% year-on-year). For 2015, the economy expanded a meagre 0.8%—the lowest reading since 2009.
Q4’s downturn came on the back of a contraction in the external sector, which more than offset a moderate improvement in the domestic sector. Subdued demand and stiffer competition for electronic products from Mainland China weighed on the external sector while low oil prices gave a small boost to domestic demand and pushed up consumption in the last quarter of 2015. Private consumption expanded 1.5% year-on-year in Q4, which came in above Q3’s 0.5% growth. Government consumption, on the other hand, swung from a 0.3% expansion in the third quarter to a 0.1% contraction in the fourth quarter. Gross capital formation contracted 0.4% in Q4 (Q3: -0.3% year-on-year).
On the external front, exports of goods and services contracted 2.6% in Q4 (Q3: -2.9% yoy). In addition, imports dropped 1.0%, coming in above Q3’s 1.5% decline (previously reported: -2.2% yoy). As exports deteriorated at a faster rate than imports, the external sector’s net contribution to overall economic growth inched down from minus 1.3 percentage points to minus 1.1 percentage points.
On a sequential basis, GDP rose 0.8% over the previous period in seasonally-adjusted terms, which contrasted the 0.1% decline observed in the third quarter of 2015. Q4 marked the best reading since Q3 2014 and is a possible indication that Taiwan’s economy bottomed out in the third quarter of last year.