Taiwan's GDP growth hits 6.51% in Q1 in advance estimate

Taipei, April 30 (CNA) Taiwan's gross domestic product (GDP) grew 6.51 percent from a year earlier in the first quarter of this year, beating an earlier forecast of 5.92 percent made in February, largely due to a stronger than expected export performance, the Directorate General of Budget, Accounting and Statistics (DGBAS) said Tuesday.

First quarter GDP growth hit the highest level since the second quarter of 2021, when the local economy grew 8.07 percent, according to the DGBAS.

In an advance estimate report, the GDBAS said first quarter economic growth was 0.59 percentage points higher than the February forecast as exports in merchandise and services rose by 10.21 percent, an increase of 2.80 percentage points from the earlier forecast.

Trade

Emerging technologies such as artificial intelligence development boosted global demand and pushed up goods exports from Taiwan, while an increase in services exports also boosted growth in the first quarter, the DGBAS said.

Speaking with reporters, Wang Tsui-hua (王翠華), a specialist at the DGBAS, said AI development served as an anchor for outbound sales growth in the local tech sector in the first quarter.

However, from March demand in the old economy sector played catch-up with exports in products like base metal, machinery and chemical products returning to growth, Wang said.

The data shows the local economy is improving almost across the board, Wang added.

In the January-March period, Taiwan's imports of merchandise and services grew 2.16 percent from a year earlier, an increase of 2.22 percentage points from the February forecast as stronger global demand prompted local companies to raise production by importing more raw materials, the DGBAS said.

Based on the latest import and export data, net foreign demand contributed 5.46 percentage points to GDP growth in the first quarter, the DGBAS added.

Private consumption

Solid private consumption also lent support to first quarter GDP growth, rising 4.14 percent from a year earlier, an increase of 0.24 percentage points from the previous estimate, the DGBAS said.

The DGBAS added domestic spending in the first quarter was boosted by a buying spree during the Lunar New Year holiday, which fell in February, and improvements in the local tourism industry, with retail sales and revenue posted by the food and beverage industries rising 3.10 percent and 8.08 percent, respectively.

Growth in private consumption contributed about 2.10 percentage points to first quarter GDP growth, the DGBAS said.

Investment

In the first quarter, capital formation, which includes investments from public and private investment, fell 4.47 percent from a year earlier largely due to an 18.67 percent decline in capital equipment imports, the DGBAS added.

The plunge in capital equipment imports reflected a relatively high comparison base over the same period of last year, when semiconductor suppliers made massive investments in equipment, it added.

The fall in capital formation cut GDP growth by 1.24 percentage points in the first quarter, the DGBAS said.

The DGBAS is scheduled to update its forecast for Taiwan's 2024 GDP growth in late May.

In its February forecast, the DGBAS said, Taiwan's GDP growth for 2024 would hit 3.43 percent, with the consumer price index expected to rise 1.85 percent from a year earlier.

It is possible the GDP growth forecast will now be upgraded to 3.57 percent, according to the agency.