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Taiwan GDP Q4 2021

Taiwan: The economy gains steam in Q4

According to a preliminary reading, GDP growth gained steam in Q4, rising to 4.9% from 3.7% in Q3. On a seasonally-adjusted quarter-on-quarter basis, economic growth sped up to 2.7% in the fourth quarter from 0.3% in the third. As a result, over 2021 as a whole the economy expanded an impressive 6.3%, likely to be one of the fastest rates in the region.

Household spending rose 1.6% in the fourth quarter, contrasting the third quarter’s 5.6% contraction. The rebound was aided by the rollout of the government’s stimulus voucher scheme, as well as a tightening labor market and the vaccine rollout. Public spending, meanwhile, accelerated to a 5.1% expansion in Q4 (Q3: +3.3% yoy). Gross capital formation surged 13.9% (Q3: 31.7%), likely aided by strong investment in the chip industry.

Exports of goods and services growth fell to 11.9% in Q4 (Q3: +14.3% yoy), while imports of goods and services growth slowed to 15.6% in Q4 (Q3: +21.8% yoy).

Looking ahead, annual growth will likely ease in Q1 2022 on a tough base effect, although underlying momentum should still be healthy.

Ho Woei Chen, economist at United Overseas Bank, gave more detail on the 2022 outlook:

“Despite the rebound in private consumption in Q4 2021, it has continued to lag the recovery in exports and investments and was coming on the back of a low comparison base. We still see significant risks to private consumption recovery this year given Taiwan’s zero-Covid strategy. […] Meanwhile, sustained global chips demand and the strong investments in machinery continue to underpin Taiwan’s manufacturing and exports outlook in 2022 but a high base will limit the growth. We are maintaining our growth forecast for Taiwan’s GDP at 3.9% this year.”

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