Taiwan’s GDP grows 1.3% in the fourth quarter due to lower demand for technology

Gross domestic product is likely to grow just 1.3% year-on-year in the October-December period, according to a survey of 20 economists, after growing 4.01% year-on-year in the third quarter.

Policymakers said they expect growth of around 3% or less than 3% for the whole of 2022, slower than the 6.45% recorded for 2021. That was the fastest pace in more than a decade since growth reached 10.25% in 2010.

Economists’ forecasts for Wednesday’s preliminary GDP data vary widely, from a contraction of 0.1% to growth of 3.5%.

Gross domestic product (GDP) peaked in the second and third quarters of last year, with the fourth quarter hit by falling electronics demand and also falling off a high base, said Chengyu Liu, an analyst at First Capital Management.

“Recent economic data from the United States is also weak,” Liu added. “Taiwan’s GDP is not expected to be good in the first and second quarters of this year, with only 1.1% growth in the first quarter.”

Demand for Taiwanese goods has been hit by COVID-19 controls and the outbreak in China, as well as rising global inflation and tightening monetary policy.

The economy in China, Taiwan’s largest trading partner, grew at an annual rate of 2.9% in the fourth quarter and 3.0% for the whole of 2022, far exceeding the official target of “around 5.5%”.

Taiwanese exports declined for the fourth consecutive month in December. In terms of value, exports fell 12.1% year-on-year last month to $35.75 billion, the lowest in 20 months.

Taiwan is an important hub in the global supply chain for giants like Apple Inc and home to the world’s largest chip maker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

The preliminary numbers for Taiwan will be announced in a statement with minimal comment. A few weeks later, revised numbers will be announced, with more details and future projections.