GDP growth records best reading since Q2 2021 in the first quarter

GDP growth accelerated to 6.5% year on year in the first quarter from 4.9% in the fourth quarter of last year. Q1's reading marked an over-two-year high and was above market forecasts, with the economy benefiting from higher IT exports and tourism, as well as a much softer downturn in investment. On a seasonally-adjusted quarter-on-quarter basis, economic growth lost momentum, cooling to 0.3% in Q1 compared to the previous quarter's 2.3% expansion.

Private consumption growth fell to 4.1% in Q1 (Q4 2023: +5.1% yoy). Public consumption rose 1.3% in Q1 (Q4 2023: 0.0% yoy), and total investment fell 4.5% (Q4 2023: 9.1% yoy). Exports of goods and services growth accelerated to 10.2% year on year in the first quarter, which marked the best reading since Q3 2021 (Q4 2023: +3.7% yoy). In addition, imports of goods and services bounced back, growing 2.2% in Q1 (Q4 2023: -4.5% yoy).

Our Consensus is for year-on-year GDP growth to slow in Q2 due to a higher base of comparison, though underlying momentum should continue to benefit from rising tourism and demand for the country’s high-tech goods exports.

On the outlook, ING’s Lynn Song said: “A less favourable base effect will likely cause the YoY growth to moderate significantly in subsequent quarters – though we expect that full-year growth will still come in significantly stronger than last year's 1.3% YoY. Nonetheless, in light of the stronger-than-expected first quarter GDP growth, we upgrade our 2024 full-year forecast to 3.6% YoY.” United Overseas Bank’s Ho Woei Chen said: “The stronger than expected 1Q24 GDP suggests upside risk to our 3.5% forecast for Taiwan’s GDP growth this year (CBC’s est. 3.22%). That is particularly so if the growth turns more broad-based as capital investment recovers along with sustained export strength and inventory rebuilding and a resilient private consumption.”

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