Taiwan Economic Growth (Nominal GDP, ann. var. %)

Economic activity undershot market expectations in Q4 by shrinking in both year-on-year and quarter-on-quarter terms. A sharp fall in exports was the main reason for the annual contraction, with Chinese demand in particular dampened by the country’s adverse Covid-19 situation. In addition, total investment flatlined amid soft business sentiment, while private consumption growth slowed. Early signs for Q1 are downbeat: In January, both the manufacturing and non-manufacturing PMIs fell, while merchandise exports were down over 20% year on year. However, a recovery in tourism and the seemingly rapid rebound in China’s economy should support activity later in Q1, and our analysts see Taiwanese GDP returning to both annual and sequential growth over the quarter as a whole.