Taipei, April 29 (CNA) Taiwan's gross domestic product (GDP) fell short of the government's forecast in the first quarter, registering minus 0.84 percent year-on-year growth, according to government figures released Friday.
The Directorate General of Budget, Accounting and Statistics (DGBAS), which had forecast first-quarter economic growth of minus 0.64 percent, said the worse than expected performance was due to slow exports amid weak global demand.
Other factors that affected Taiwan's first-quarter exports included escalating competition from China, which has been building its own supply chain, and low prices of agricultural and industrial raw materials, said DGBAS specialist Wang Shu-chuan (王淑娟).
Most sectors in Taiwan suffered a double digit decline in exports in the first three months of the year, while electronics fell 4.53 percent and machinery dropped 9.11 percent, according to the data.
After inflationary adjustments, the first-quarter decline in exports of merchandise and services was 3.93 percent, worse than the DGBAS forecast of a 2.36 percent year-on-year drop.
Meanwhile, first-quarter imports of merchandise and services showed a 0.94 percent drop from a year earlier, after inflationary adjustments, compared with the DBBAS' forecast of a 0.53 percent increase.
The DGBAS said weaker exports led to falling demand among Taiwanese firms in the first quarter, while lower raw material prices also affected the country's imports.
The worse than expected exports and imports dragged down the country's economic growth by 2.06 percentage points in the first quarter, the DGBAS said.
It was the third consecutive quarter that Taiwan economy contracted, after a 0.80 percent decline in the third quarter of last year and a 0.52 percent drop in the fourth quarter.
The DGBAS said private investments were also lower than expected in the first quarter, leading to a drop in capital formation.
Although investments in machinery showed signs of recovering, investments in the construction sector were on the decline, which pushed down total private investments, the DBDAS said.
As a result, it said, Taiwan's capital formation for the January-March period fell 2.48 percent from a year earlier, compared with a forecast 0.94 percent increase, according to the DGBAS.
The local retail sector, however, remained resilient, boosting private consumption on the back of better than expected sales in vehicles, oil products and fashion items and higher revenue in dining services.
In the first quarter, private consumption in Taiwan rose 1.84 percent from a year earlier, beating an earlier forecast of a 1.24 percent increase and boosting the entire GDP growth for the period by 0.93 percent, the DGBAS said.
In mid-February, the DGBAS revised its forecast for Taiwan's 2016 GDP to 1.47 percent from 2.32 percent.
Market analysts have predicted that it would be difficult for Taiwan to register an annual 1 percent GDP growth this year in light of its continued weak exports.
The DGBAS is scheduled to update its 2016 GDP growth forecast in May.
(By Chen Cheng-wei and Frances Huang)