Taiwan’s Q2 GDP Growth Revised Downward to 1.48% as Exports and Investments Contract
Taiwan’s second-quarter GDP growth has been revised downward to 1.48 percent, citing contracting exports and investments as major contributing factors. The Directorate-General of Budget, Accounting, and Statistics (DBGAS) had initially predicted an expansion of 1.82 percent in May. However, weak global demand, prolonged inventory adjustments, and reduced domestic investments have weighed heavily on Taiwan’s export-reliant economy.
Despite falling short of the May forecast, the revised figure indicates a return to positive territory after the first quarter’s 2.87 percent contraction. This suggests a recovering growth momentum, although weaker than anticipated. Economists widely agree that achieving 2 percent growth this year will be challenging due to the challenging global economic landscape. However, Taiwan’s GDP growth is expected to stay above 1 percent.
Several institutions and the central bank have also adjusted their GDP growth projections for this year. The central bank now forecasts growth at 1.72 percent, down from 2.21 percent, while other research institutes estimate figures ranging from 1.45 to 1.66 percent. The DGBAS is expected to announce its revised full-year forecast on August 18th.
Remarkably, domestic demand played a significant role in Taiwan’s economic recovery during the second quarter. Private consumption saw a remarkable surge of 12.14 percent year-on-year, marking the strongest performance in 33 years. This exceptional growth in domestic demand offset the negative effects of slowing external demand, thanks to increased job creation, the recovery of service demand, a vibrant tourism sector, and growing stock market confidence. If local stocks continue to improve, they will further support private consumption.
Moving forward, the recovery in private consumption is expected to remain the primary driver of Taiwan’s growth in the second half of the year. With normalized domestic activities, a resilient stock market, improved labor market conditions, and stabilized consumer inflation, this momentum is likely to continue. However, uncertainties still loom over domestic investment and external demand due to inventory destocking and geopolitical tensions.
Looking ahead, there is cautious optimism regarding exports in the fourth quarter. Historically, this period represents the peak season for consumption in Europe and the US, favoring strong export performance. Additionally, the decline in global semiconductor sales seems to be reaching its bottom, and the growing optimism surrounding chips related to artificial intelligence devices further fuels hope. However, it is essential to approach these positive indicators with caution, avoiding complacency in Taiwan’s economic outlook.
