Taiwan: GDP slows in the second quarter but remains strong
August 18, 2011
In the second quarter, GDP rose 5.0% over the same period last year, according to an 18 August estimate, which was above the advance estimate of 4.9% published on 29 July. The reading was below the 6.2% expansion recorded in the fourth quarter (previously reported: +6.5% year-on-year) but exceeded market expectations that the economy would expand 4.5%. The second quarter deceleration reflected slower growth in the external as well as the domestic sector. Private consumption slowed from a 4.4% annual increase in the first quarter to a 3.1% expansion, while gross fixed investment decelerated more markedly to a subdued 1.6% (Q1 2011: +8.6% yoy). However, the contribution from inventories swung from minus 1.5 percentage points in the previous period to plus 0.2 percentage points. Therefore, domestic demand decelerated to a 2.6% increase, down from the 2.9% expansion registered in the first quarter. The net contribution from the external sector to overall growth deteriorated from a 3.7 percentage point contribution in the first quarter to a 2.8 percentage point contribution in the second. Exports of goods and services grew 4.4% (Q1 2011: +11.2% yoy), while imports expanded 0.9% (Q1 2011: +7.4% yoy). A quarter-on-quarter comparison corroborates the deceleration suggested by the annual figures, as the economy expanded 0.2% over the previous quarter in seasonally-adjusted terms, only a fraction of the 3.5% expansion in the previous period. Owing to slightly weaker domestic demand, the government revised its GDP forecast for this year marginally downwards, from 5.0% to 4.8%. For 2012, the government expects the economy to expand 4.6%.