Taiwan Q2 GDP grows at slowest in two years on China lockdowns, COVID
TAIPEI — Taiwan’s economy grew at its slowest pace in two years in the second quarter and performed slightly worse than expected, hit by supply chain woes and a surge in domestic COVID cases, with the outlook for exports clouded by signs of a global slowdown.
For the April-June period, annual gross domestic product(GDP) grew by 3.08% from the same period a year earlier, compared with 3.14% for the previous quarter, preliminary data from the statistics agency showed on Friday.
That was below an increase of 3.1% forecast in a Reuters poll, and the slowest pace since eking out 0.63% growth in the second quarter of 2020 when the pandemic began to race around the world.
Compared to the previous quarter, the economy contracted 2.93% on a seasonally adjusted annual rate.
As a key hub in the global technology supply chain for giants such as Apple Inc, Taiwan’s economy has outperformed many regional peers during the COVID-19 pandemic, benefiting from robust demand for tech exports as more people have turned to working and studying from home.
A global shortage of semiconductors has also filled Taiwan chip makers’ order books and driven them to expand production at home.
But supply chain problems caused by lockdowns in its largest trading partner China to control COVID-19, plus a domestic coronavirus outbreak have weighed on Taiwan’s trade-dependent economy.
The statistics office said exports in the second quarter had been impacted by both China’s lockdowns and slowing demand for consumer electronics, while domestic consumption was affected by Taiwan’s own COVID outbreak.
Total second-quarter exports rose 15.38% from a year earlier in U.S. dollar terms, the agency said.
Capital Economics said any recovery in consumption was likely to be held back by higher commodity prices and tighter monetary policy, with exports also probably remaining subdued.
“Higher inflation and tighter financial conditions are likely to weigh on global demand over the coming year. A shift in consumption habits from goods back towards services will also weigh on prospects,” it said, adding it sees the economy growing by 3.5% this year and 2.0% next year.
The economy in China, Taiwan’s largest trading partner, grew a tepid 0.4% in the second quarter, highlighting the colossal toll from widespread lockdowns. While growth has begun to recover, sporadic virus flareups continue to disrupt activity in parts of the country.
The International Monetary Fund cut global growth forecasts again on Tuesday, warning that risks from high inflation and the Ukraine war could push the world economy to the brink of recession if left unchecked.
Taiwan will release revised GDP figures on Aug. 12, including full-year growth forecasts for 2022. In May, the statistics agency revised down its full year outlook to 3.91% from a previous forecast of 4.42%. (Reporting by Roger Tung and Meg Shen; Writing by Ben Blanchard; Editing by Kim Coghill)