Taiwan economy grows 2.1% in Q3, fastest in over a year

A steel worker at a factory in Kaohsiung, Taiwan. The island's export orders rose sharply more than expected last month as vendors stocked up on supplies for Apple's iPhone 7 and other gadgets to meet year-end demand.
A steel worker at a factory in Kaohsiung, Taiwan. The island's export orders rose sharply more than expected last month as vendors stocked up on supplies for Apple's iPhone 7 and other gadgets to meet year-end demand.PHOTO: REUTERS

TAIPEI • Taiwan's economy grew at its fastest pace in more than a year in the third quarter, thanks to strong demand for tech gadgets ahead of the year-end shopping spree and better investment and consumption at home.

The result marked the latest evidence of a gradual recovery in the export-driven economy, and backs expectations that the central bank would hold rates steady for a second time at its December quarterly meeting.

Taiwan's gross domestic product growth accelerated to 2.06 per cent in the third quarter, year on year, almost three times the 0.7 per cent growth clocked in the second quarter, preliminary government data from the Directorate- General of Budget, Accounting and Statistics showed yesterday.

"Though global economic growth remains slow... (Taiwan's) exports gained momentum from stronger semiconductor demand and launches of handheld devices," it said in a statement. "Consumption and investments at home were better than forecast."

A Reuters poll had forecast the economy to have expanded 1.8 per cent in the third quarter, year on year.

On a seasonally adjusted annualised rate basis, the economy grew 4.54 per cent in the July-September period, well ahead of the 0.23 per cent in the second quarter.

Taiwan is a major Asian production house for global tech names such as Apple, making components for smartphones, notebook PCs and other gadgets.

The global slowdown of the past two years or so, led by a cooling in major trading partner China, had depressed growth on the island.

However, signs of a recovery have started to emerge. Taiwan's export orders - a leading indicator for Asia's exports and a pointer to shipment activity two to three months ahead - rose sharply more than expected last month as vendors rushed to stock up on supplies for Apple's iPhone 7 and other tech gadgets to meet year-end demand.

That surprise came on the heels of an unexpected 8.3 per cent jump in August - its first gain in 17 months.

The government in August raised its 2016 full-year economic growth outlook, after earlier slashing forecasts for the year three times, hoping demand from China and its other major markets would pick up.

Taiwan's central bank left its key policy rate unchanged last month, saying it has done all it can to support the economy and calling for more structural reforms to keep growth on track. It had cut rates over four straight meetings previously.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 29, 2016, with the headline 'Taiwan economy grows 2.1% in Q3, fastest in over a year'. Print Edition | Subscribe