Taiwan estimated Q3 GDP growth below earlier forecast: DGBAS

Taipei, Oct. 31 (CNA) Taiwan's Directorate General of Budget, Accounting and Statistics (DGBAS) said Tuesday that a below-forecast advanced estimate of 2.32 percent third-quarter gross domestic product (GDP) growth was mainly due to sluggish investments.

With an uncertain economic outlook, Taiwan's estimated third-quarter GDP growth was 0.22 percentage points lower than the 2.54 percent forecast in August, the DGBAS said.

For 2023 as a whole, if the GDP in the fourth quarter growth stays at 5.59 percent as an earlier forecast made in August, the weaker-than-expected growth in the third quarter will drag the growth for the entire year down to 1.55 percent, below the previous projection of 1.61 percent, according to DGBAS official Wang Tsui-hua (王翠華).

In the third quarter, exports of goods and services dropped by 1.05 percent from a year earlier, 1.99 percentage points lower than the August forecast, according to the DGBAS.

Meanwhile, with weak global end-user demand, many companies have scaled back investments, the DGBAS said.

Coupled with the high base of comparison last year, this led to a 22.75 percent year-on-year decline in imports of capital equipment denominated in New Taiwan dollars in the third quarter, according to the DGBAS.

As a result, Taiwan's capital formation, which includes public and private investments, fell by an estimated 14.04 percent from a year earlier in the third quarter, a fall of 9.61 percentage points from the previous forecast, and that weakness became the main force driving down the country's economic growth significantly in the third quarter, the DGBAS said.

Wang attributed the sharp fall in capital formation to the base effects, noting that the capital formation had seen expansion for five consecutive years from 2018-2022 before showing contraction due to weak private investments amid economic uncertainties.

However, the scale of investments is still larger than that before the COVID-19 pandemic, Wang said, adding that the investment momentum stays persistent.

Private consumption in the third quarter is estimated to have grown 8.9 percent from a year earlier, 0.56 percentage points higher than the previous forecast, mainly driven by a strong rebound in spending on outbound tourism, according to Wang.