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Taiwan GDP Q3 2020

Taiwan: Second estimate shows stronger GDP expansion in Q3

GDP jumped 3.9% year-on-year in the third quarter, according to a second estimate. The print came in notably above the preliminary estimate of a 3.3% rise, marking a strong acceleration from Q2’s revised 0.4% increase (previously reported: -0.6% yoy) and the best result in nearly four years. Moreover, on a seasonally-adjusted quarter-on-quarter basis, economic activity jumped 3.9% in Q3 (previously reported: +4.4% s.a. qoq), rebounding from the previous quarter’s 0.7% contraction (previously reported: -1.4% s,a, qoq), and marking the best result in over a decade.

The third quarter’s upturn was spearhead by the external sector, chiefly thanks to stronger demand for electronics from the U.S. and China. Exports of goods and services rebounded, jumping 3.6% yoy in Q3 (previously reported: +3.5% yoy), which marked the best reading in nearly three years (Q2: -3.4% yoy). In addition, imports of goods and services fell at a slower pace of 3.3% in Q3 (previously reported: -1.8% yoy; Q2: -5.3% yoy).

Domestic demand also posted a strong improvement in Q3, although metrics were slightly less upbeat than in the external sector. Private consumption declined at a softer rate of 1.5% yoy in Q3, unchanged from the preliminary estimate and marking the best reading this year (Q2: -5.2% yoy). Moreover, government spending rebounded, growing 3.4% in Q3 (previously reported: +3.2% yoy; Q2: -0.9% yoy). Lastly, fixed investment growth gained traction, coming in at 4.4% in the third quarter, following the 4.1% expansion in the second quarter.

Looking forward, the economy is expected to end this year on a healthy note, as robust foreign demand for technology products continues to shield the economy from the Covid-19-related global slowdown. Growth should pick up steam next year, as recovering consumer demand is set to boost domestic activity. According to the national Statistics Institute, GDP is projected to grow 2.5% in 2020, improving markedly from the previous estimate of a 1.5% increase, before accelerating to 3.8% in 2021.

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