Taiwan Q2 GDP growth accelerates on export gains from U.S.-China trade row

02, Aug. 2019

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TAIPEI, NNA – Taiwan’s economy in the April-June quarter grew at a faster pace compared to the previous quarter and a year earlier, partly thanks to a rise in exports to the U.S. amid its trade dispute with China.

The Directorate General of Budget, Accounting and Statistics released the latest gross domestic product data on Wednesday.

Key points:

―― Taiwan’s GDP in the second quarter expanded 2.4 percent from a year earlier, coming in stronger than expected and accelerating from 1.7-percent growth in the previous three-month period. It grew 1.2 percent quarter-on-quarter, also up from 0.6 percent in Q1.

―― Exports declined 2.6 percent on year in U.S. dollar terms but gained 2.3 percent in New Taiwan dollar terms. The gain was led by information, communication and audio-visual products (+20.2 percent) as some Taiwanese manufacturers moved their factories from China to avoid higher U.S. tariffs.

―― Business investment also supported growth. Higher capex was seen in construction, vehicles for business use, and the semiconductor sector.

―― Total capital formation in both the public and private sectors grew 6.0 percent, slowing from 6.9 percent in Q1. This pushed up y/y GDP growth by 1.2 percentage points.

―― Private consumption rose 1.6 percent in Q2, with the pace of increase accelerating slightly from 1.3 percent in Q1.

―― Government spending remained depressed, down 2.7 percent, after shrinking 3.31 percent in Q1.

―― In the first half of the year, GDP increased 2.1 percent from a year earlier.

Takeaway:

―― It is uncertain whether Taiwan’s economy will continue growing at this pace in the second half of the year as global growth is slowing amid the U.S.-China trade row. Japanese restrictions on exports of key chip-making materials to South Korea could also hurt supply chain networks and reginal trade.

―― China’s new policy to stop issuing individual travel permits for its nationals to visit Taiwan might dampen retail sales and tourism.