Taiwan’s GDP grew 1.3% in the fourth quarter on cooling demand for technology

A survey of 20 economists found that gross domestic product (GDP) grew by only 1.3% year-on-year in the October-December period, after growing 4.01% yoy in the third quarter.

Policymakers expect growth of 3% or less for the whole of 2022, slower than the 6.45% recorded in 2021. This is the fastest pace in more than a decade since growth hit 10.25% in 2010.

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

While GDP peaked in the second and third quarters of last year, demand for electronics slowed in the fourth quarter and came from a higher base, First Capital Management analyst Chengyu Liu said.

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

Demand for Taiwanese goods has been hit by Covid-19 restrictions and outbreaks in China, rising global inflation and tightening monetary policy.

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

Taiwan’s exports fell for a fourth straight month in December. In value terms, exports fell 12.1% year-on-year to $35.75 billion last month, a 20-month low.

Taiwan is a key hub in the global supply chain for giants such as Apple Inc and is home to Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chip maker.

Taiwan’s preliminary figures will be released in a report with minimal comment. A few weeks later, the revised numbers will be announced with more details and forward-looking projections.