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Taiwan GDP grows 7.47% in Q2 despite COVID-19

2021-08-01
Focus Taiwan
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Image from Unsplash for illustrative purposes
Image from Unsplash for illustrative purposes

Taipei, July 31 (CNA) Taiwan's gross domestic product (GDP) rose 7.47 percent from a year earlier in the second quarter of this year based on preliminary figures, although the country saw an outbreak of indigenous COVID-19 cases, according to the Directorate General of Budget, Accounting and Statistics (DGBAS).

The second quarter GDP growth even beat an earlier estimate of a 6.93 percent increase made by the DGBAS in June, but appeared slower than the 8.92 percent year-on-year growth seen in the first quarter.

In the first half of the year, Taiwan's economy grew a robust 8.19 percent, making it possible for the DGBAS to raise its forecast for 2021 from an estimate of 5.46 percent made in early June.

Wu Pei-hsuan, a specialist at the DGBAS, said the domestically transmitted COVID-19 outbreak since mid-May did not have much impact on the local exports-oriented manufacturing sector at a time when global demand had accelerated.

In the April-June period, Taiwan's exports of merchandise and services rose 22.93 percent from a year earlier due to continuing strong demand for emerging technologies such as 5G applications and high performance devices from a booming stay-at-home economy, the DGBAS said.

In addition, imports also rose 17.74 percent in the second quarter, according to the DGBAS.

Due to the strong export performance, net external demand contributed 5.19 percentage points to the entire GDP growth, the DGBAS said.

Wu said with global demand on the rise, many local manufacturers became keen to invest for production expansion, which pushed up domestic investment for the second quarter.

As a result, capital formation, which includes private and government investment, grew 8.58 percent in the second quarter, which contributed 2.15 percentage points to the GDP growth in the quarter, according to the DGBAS.

While many manufacturers remained unscathed amid COVID-19, Wu said, the pandemic forced the government to tighten its measures to restrict people movement and implement a ban on onsite dining. As a result, private consumption felt the pinch with sales generated by the food and beverage industry falling 11.23 percent from a year earlier in the April-June period.

As a result, the second quarter's private consumption fell 0.41 percent, wiping out GDP growth by 0.20 percentage points, the DGBAS said.

Based on the strong GDP growth in the second quarter, Wu said it was possible for economic growth in 2021 to hit 5.58 percent.

Meanwhile, several local research institutions have raised their forecasts of Taiwan's 2021 GDP growth to more than 5 percent.

Among them, Academia Sinica, Taiwan's top research institution earlier this week placed its estimate at 5.05 percent, while The Chung-Hwa Institution for Economic Research and Taiwan Institute of Economic Research recently projected full-year growth rates of 5.16 percent and 5.4 percent, respectively.

However, Wu said the continuing spread of COVID-19 is expected to create uncertainty over the local economy for the rest of the year, adding the disease and its potential impact on economic growth deserves close attention.

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