Taiwan: Second GDP release for Q3 confirms strongest growth in over two years
November 24, 2017
A second estimate released by the Directorate General of Budget, Accounting and Statistics confirmed that the Taiwanese economy accelerated more than expected in the third quarter, driven by soaring growth in shipments overseas and stronger household consumption. GDP increased 3.1% on an annual basis in Q3, marking the best reading in two and a half years and surprising market analysts, who had expected a much weaker 2.2% rise. The Q3 GDP figure also surpassed the 2.1% expansion recorded in the previous quarter.
The second estimate highlighted the external sector’s brilliant performance. The island’s export-oriented firms benefited in Q3 from a cyclical upswing in the electronics sector, as well as healthy global demand. Exports rose 11.7% from the previous year in Q3, which was above the 11.2% previously reported and above the 5.1% increase recorded in Q2. Imports were 6.9% higher in Q3 from the same period of the previous year (previously reported: +6.5% year-on-year), up from a 5.0% expansion in Q2. As a result, the external sector’s net contribution to overall growth came at a near decade high of 4.5 percentage points in Q3, well above the 0.4 percentage-point contribution recorded in Q2.
Contrasting the external sector’s excellent health, the domestic economy performed unevenly across components in Q3. All components were, however, upwardly revised in the second estimate from the preliminary release. Private consumption growth accelerated notably from a 2.1% increase in Q2 to a 2.7% rise in Q3, a substantial improvement over the 2.0% increase estimated a month ago. Fixed investment swung from a 0.8% increase in the second quarter to a 3.7% decrease in the third quarter, which was nonetheless an improvement from the 7.8% plunge reported initially. Government consumption growth was also revised upwards and is now estimated to have remained steady at 0.8% in Q3.
The rosy picture of the economy was also reflected in quarter-on-quarter data. GDP growth adjusted for seasonal factors jumped 1.7% in Q3 from the previous quarter, which was slightly below the 1.8% previously reported. However, Q2’s quarter-on-quarter growth was upwardly revised from a 0.1% increase to a 0.4% expansion.
Author: David Ampudia, Economist