Taiwan Q1 preliminary GDP grows faster than expected

TAIWAN'S economy grew at a slower pace in the first quarter compared with the previous 3 months but still performed better than expected, supported by strong tech exports and global demand for chips but affected by weaker consumer confidence.

For the January-March period, annual gross domestic product (GDP) growth was put at 3.06 per cent, compared with 4.86 per cent for the previous quarter, preliminary data from the statistics agency showed on Thursday (Apr 28).

That was above an increase of 2.9 per cent forecast in a Reuters poll, but was the slowest growth since the second quarter of 2020, when the economy grew 0.63 per cent year-on-year.

As a key hub in the global technology supply chain for giants such as Apple, Taiwan's economy has outperformed many regional peers during the Covid-19 pandemic, benefiting from robust demand for tech exports as more people have turned to working and studying from home.

A global shortage of semiconductors has also filled Taiwan chip makers' order books and driven them to expand production at home.

Taiwan's exports rose 29.4 per cent in 2021, and the economy continues to benefit from strong global demand for its high-tech goods and chips.

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Total first-quarter exports soared 23.5 per cent from a year earlier in US dollar terms, the agency said.

It attributed the quarterly GDP growth to stronger-than-expected exports, driven by continued international demand for the island's tech products including semiconductors.

A recovery in domestic consumption amid the relaxation of Covid-19 rules was offset by inflation, and consumption only grew marginally in the quarter, it added.

Kevin Wang, an economist at Taishin Securities Investment Advisory, said second quarter domestic demand may remain weak due to a recent spike in Covid-19 cases, but he was sticking to a 4.2 per cent growth forecast for the quarter.

"As for exports, we need to watch whether US consumer strength has been reduced due to worsening inflation, and whether the impact of China's lockdown measures in response to the epidemic on the supply chain and production has expanded," he said.

China's economy grew a faster-than-expected 4.8 per cent year-on-year in the first quarter, but a risk of a sharp slowdown over coming months has risen as sweeping Covid-19 curbs, especially in Shanghai, and the Ukraine war disrupt production and weaken demand.

Taiwan will release revised GDP figures next month, including full-year growth forecasts for 2022. REUTERS