By Jeanny Kao and Faith Hung
TAIPEI (Reuters) -Taiwan’s export-dependent economy returned to growth in the second quarter, helped by resilient domestic consumption, while exports remained weak as a result of flagging demand for the island’s technology products amid global headwinds.
Gross domestic product (GDP) expanded by a preliminary 1.45% in the April-June period versus a year earlier, the statistics agency said on Friday, beating the 0.8% growth forecast in a Reuters poll.
Quarter-on-quarter, the economy expanded at a seasonally adjusted annual rate of 7.02%.
GDP in the first quarter had fallen 2.87% from a year earlier, with the economy slipping into recession.
Analysts attributed the recovery from a technical recession to a domestic economic rebound, while factors beyond Taiwan’s shores continue to jeopardise the island’s prospects.
“Looking forward to Q3, we expect domestic private sector consumption to return to normal levels…about 1.5%-2% growth,” said Chengyu Liu of First Capital Management.
“Export demand remains weak. Taiwan’s central bank will not raise interest rates” at its next meeting in September, he said, adding that 2023 GDP growth would remain below 2%.
Taiwan’s exports fell more than expected in June, slumping the most in nearly 14 years, with the government predicting that a return to growth may not occur until November.
Second-quarter exports dropped 16.9% compared with the same period last year, still slightly better than the first quarter’s annual contraction of 19.2%.
The government said in May it expects full-year 2023 growth of 2.04%, the slowest pace in nearly eight years and lower than 2.45% growth in 2022.
The economy in China, Taiwan’s largest export market, grew 6.3% in the second quarter, coming in under analyst forecasts, as demand weakened at home and abroad, with post-COVID momentum faltering rapidly.
Taiwan is a key hub in the global technology supply chain for companies such as Apple Inc, and home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
The statistics agency will provide revised figures for the second quarter on Aug. 18, with more details and forward-looking forecasts.
(Reporting by Jeanny Kao and Faith Hung; Additional reporting by Roger Tung; Editing by Ben Blanchard, Edmund Klamann and Tomasz Janowski)
