Taiwan's GDP grows 3.08% in Q2, missing government forecast

07/29/2022 07:59 PM
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Shoppers at a store in Taipei
Shoppers at a store in Taipei's Xinyi District Friday. CNA photo July 29, 2022

Taipei, July 29 (CNA) Taiwan reported Friday that its gross domestic product (GDP) grew 3.08 percent in the second quarter of the year, lower than the May forecast of 3.31 percent, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).

In its advance estimate report, the DGBAS said the lower than expected GDP growth for the second quarter was largely due to the fact that the positive contribution of export growth in merchandise and services failed to offset the negative contribution of import growth.

With many Taiwanese exporters keen to expand production capacity through investments in equipment, Taiwan's imports of merchandise and services grew 8.81 percent from a year earlier in the second quarter, which translated into a negative 4.42 percentage point contribution to the GDP growth.

On the other hand, exports of merchandise and services, which grew 4.31 percent from a year earlier in the second quarter, represented a 2.87 percentage point positive contribution to GPD growth.

The difference in the positive contribution in exports and negative import contribution represented a decline of 1.55 percentage points in second quarter economic growth, the DGBAS said.

In the second quarter the appetite to spend among consumers was impacted by a new wave of domestically transmitted COVID-19 infections, although private spending showed signs of bouncing back from June, the DGBAS added.

However, due to a relatively low comparison base over the same period last year, when a Level 3 alert was imposed to restrict people's movements, retail sales and revenue posted by food and beverage vendors rose 9.56 percent and 17.63 percent, respectively, from a year earlier in the second quarter.

As a result, private consumption in the second quarter still grew 2.96 percent, contributing a 1.31 percentage point increase to GDP growth in the second quarter, although the 2.96 percent increase was still 0.07 percentage points lower than the May forecast, the DGBAS said.

In addition, government spending rose 5.86 percent from a year earlier in the second quarter, up 1.11 percentage points from the May estimate, representing a contribution of 0.76 percentage points to second quarter DGP growth, the DGBAS added.

Capital formation in the second quarter rose 9.43 percent from a year earlier as Taiwanese manufacturers rushed to expand production capacity, and capital formation growth contributed a 2.56 percentage point increase to quarterly GDP growth, the DGBAS said.

Overall domestic demand grew 5.50 percent from a year earlier in the second quarter, which contributed a 4.64 percentage point increase to GDP growth, the DGBAS added.

According to the DGBAS, the consumer price index for the second quarter rose 3.46 percent from a year earlier in the second quarter after a 2.81 percent increase in the first quarter.

In the first half of this year, Taiwan's GDP grew 3.11 percent from a year earlier, the DGBAS said.

However, in its May forecast the DGBAS said Taiwan's GDP would grow 3.91 percent in 2022, a downgrade from an earlier forecast of 4.22 percent in February.

Although the second quarter GDP growth missed the May forecast, the DGBAS said it has not yet revised its forecast for 2022 as a whole, adding that the update will be released on Aug. 12.

(By Su Ssu-yun and Frances Huang)

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