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Taiwan GDP Q3 2019

Taiwan: Second GDP release confirms Q3 acceleration

The economy expanded 3.0% in the third quarter compared to the same quarter a year earlier, according to a second GDP release, which is higher than both the preliminary 2.9% reading and the 2.6% growth achieved in the second quarter. On a seasonally-adjusted quarter-on-quarter basis, growth decelerated to a revised 0.6% in Q3 (previously reported: +1.1% quarter-on-quarter), down from 0.9% in Q2.

Private consumption increased a revised 2.3% in Q3 in year-on-year terms (previously reported: +2.0% year-on-year), up from 1.6% in Q2 and likely supported by rising real wages. Moreover, government consumption climbed a revised 3.8% in Q3 (previously reported: +3.7%), contrasting the 2.6% decrease in Q2 and marking the fastest increase since Q4 last year. Following the release of the earlier preliminary release, Iris Pang, an economist at ING, commented: “We believe this [government] spending includes subsidies to preferential investments, which has prompted some Taiwanese manufacturers to move their production lines from Mainland China to Taiwan”. Gross fixed capital formation, meanwhile, rose 4.3% in Q3, down from 11.4% in Q2.

On the external front, exports of goods and services increased a revised 0.3% in Q3 (previously reported: +4.2% yoy), down from Q2’s 1.4%. Imports dropped a revised 2.3% (previously reported: +2.2% yoy), contrasting the 0.3% growth recorded in Q2.

Moving forward, economic growth is likely to face headwinds from the ongoing U.S.-China trade war and weaker demand for new smartphones, which could negatively impact manufacturing output and exports. On the political front, if independence-supporting President Tsai is re-elected in the January general election, this could result in higher government spending and continued frosty relations with China.

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