Taiwan’s Q2 GDP Growth Revised Downward to 1.48% as Exports and Investments Contract

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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.

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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.

Frequently Asked Questions (FAQs) Related to the Above News

What was Taiwan's second-quarter GDP growth rate?

Taiwan's second-quarter GDP growth rate was revised downward to 1.48 percent.

What were the major contributing factors for the downward revision?

The major contributing factors for the downward revision were contracting exports and investments.

What was the initial GDP growth prediction for the second quarter?

The Directorate-General of Budget, Accounting, and Statistics (DGBAS) initially predicted an expansion of 1.82 percent for the second quarter.

What are the reasons behind the weaker than anticipated GDP growth?

Weak global demand, prolonged inventory adjustments, and reduced domestic investments are the reasons behind the weaker than anticipated GDP growth.

Will Taiwan be able to achieve 2 percent growth this year?

Economists widely agree that achieving 2 percent growth this year will be challenging due to the challenging global economic landscape.

What is the outlook for Taiwan's GDP growth for the year?

Taiwan's GDP growth is expected to stay above 1 percent, although specific figures are yet to be announced.

How did domestic demand contribute to Taiwan's economic recovery in the second quarter?

Domestic demand played a significant role in Taiwan's economic recovery in the second quarter, with private consumption seeing a remarkable surge of 12.14 percent year-on-year.

What factors drove the growth in domestic demand?

Increased job creation, the recovery of service demand, a vibrant tourism sector, and growing stock market confidence drove the growth in domestic demand.

What is expected to be the primary driver of Taiwan's growth in the second half of the year?

The recovery in private consumption is expected to remain the primary driver of Taiwan's growth in the second half of the year.

What uncertainties still exist for Taiwan's economy?

Uncertainties still exist for Taiwan's economy regarding domestic investment and external demand due to inventory destocking and geopolitical tensions.

Is there optimism regarding exports in the fourth quarter?

There is cautious optimism regarding exports in the fourth quarter, as it represents the peak season for consumption in Europe and the US, favoring strong export performance.

What is fueling optimism in the semiconductor industry?

The decline in global semiconductor sales seems to be reaching its bottom, and the growing optimism surrounding chips related to artificial intelligence devices is fueling hope.

Is it important to approach positive indicators about Taiwan's economic outlook with caution?

Yes, it is essential to approach positive indicators with caution and avoid complacency in Taiwan's economic outlook.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

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