© Reuters. FILE PHOTO: Cars might be seen driving by the metro station and freeway in Taipei, Taiwan, October 26, 2021. REUTERS/Ann Wang
TAIPEI (Reuters) -Taiwan’s economy grew at its slowest tempo because the second quarter of 2020 in the July-September interval as coronavirus curbs to include an area COVID-19 outbreak hit consumption, however exports and funding remained robust.
Gross home product (GDP) grew 3.8% in third quarter from a yr earlier after a 7.43% rise in the April-June interval, preliminary information from the statistics company confirmed on Friday, coming in just under the 4% improve forecast in a Reuters ballot.
That was the smallest progress because the second quarter of 2020, when the economy gained 0.35%.
“(GDP growth was) mainly attributed to better-than-expected domestic investment as well as continuous expansion of exports,” the company mentioned in a press release.
“But consumption was weak due to the impact from epidemic curbs, which partially offset growth.”
As a key hub in the worldwide know-how provide chain for giants equivalent to Apple Inc (NASDAQ:), Taiwan’s economy has outperformed a lot of its regional friends throughout the COVID-19 pandemic because it benefited from sturdy demand for its tech exports throughout the work-and-study-from-home development.
Government restrictions to include an increase in COVID-19 instances from mid-May helped set off a 5.49% decline in consumption in the third quarter. But economists count on consumption to rebound as the federal government has since lifted most of these restrictions, having managed to include the outbreak.
“With the recent COVID-19 outbreak under control and the vaccine rollout gaining momentum, consumption should recover,” mentioned Gareth Leather, senior Asia economist at Capital Economics.
Meanwhile, Taiwan’s economy continues to profit from robust international demand for its high-tech items and chips, whereas home funding has additionally underpinned financial exercise.
Total exports soared 30.12% year-on-year in U.S. greenback phrases in the third quarter, the company mentioned, including funding in manufacturing capability enlargement and renewable vitality was growing, with out offering additional particulars.
“A backlog of orders will keep Taiwan’s exporters busy for some time yet. Meanwhile, the surge in demand for semiconductors is leading to a boom in investment, which will continue to support GDP,” Leather added.
ANZ mentioned it had revised larger its GDP progress forecast to six.0% in 2021 due to robust funding in the third quarter.
That was in maintaining with official forecasts, with each the federal government and the central financial institution betting on 6.0% progress in 2021. The economy expanded 3.12% in pandemic-hit 2020.
Statistics official Wu Pei-hsuan mentioned so long as worldwide demand for the island’s merchandise persists, each Taiwan’s exports and manufacturing may maintain their “strong growth momentum” subsequent yr.
Pent-up demand in nations rising from lockdowns has boosted gross sales, whereas microchip costs are surging as a result of a worldwide scarcity.
A worldwide scarcity of chips for the whole lot from vehicles to shopper electronics has additionally bolstered demand for made-in-Taiwan semiconductors, with producers quickly increasing capability.
One potential threat might be a slowdown in the economy of China, Taiwan’s prime buying and selling accomplice. The world’s second-largest economy grew at its slowest tempo in a yr in the third quarter, damage by energy shortages, provide bottlenecks and sporadic COVID-19 outbreaks.
Taiwan’s central financial institution has saved rates of interest at document lows because the final lower in March 2020, and analysts say it’s unlikely to extend them till later subsequent yr on the earliest, and solely after an eventual U.S. price hike.
Taiwan’s revised GDP figures, together with progress estimates for the complete yr, will probably be launched in November.